For those individuals facing significant financial adversity due to the Coronavirus, the Government is allowing them to access $10,000 of their superannuation before June 30, 2020 and a further $10,000 from July 1, 2020 and September 24, 2020. Amounts withdrawn do not need to be included in tax returns.
The primary purpose of superannuation is to save for retirement and any withdrawals will impact on your future balance. Having said that, given the extraordinary current circumstances, making a withdrawal might be essential.
To be eligible for any early release of amounts from superannuation, Australian (and New Zealand) permanent residents must:
- unemployed, or
- Be eligible to receive JobSeeker, Youth Allowance for JobSeekers, parenting payment (includes single and partnered payments), special benefit or farm household allowance; or
- On or after 1st January 2020:
You were made redundant; or
Your working hours were reduced by 20 per cent or more; or
For sole traders – your business was suspended or turnover was reduced by 20 per cent or more.
(Note that extra criteria applies for all classes of temporary visa holders).
Application is through the myGov website directly to the ATO and will require you to certify that you meet the eligibility criteria. After processing the ATO issues you with a determination and sends a copy to your superannuation fund so that they can release the money to you without having to apply separately. Self managed super funds have separate arrangements.While withdrawing funds out of your superannuation fund is not ideal, it is a one-off opportunity to access funds you would not normally be able to access so it is something that should be considered.
To minimise the impact on your superannuation balance on retirement, you could consider salary sacrificing or contributing to your superannuation in the future to replenish the amount withdrawn in these circumstances.
Don’t hesitate to get in touch if you wish to discuss this option before proceeding.