COVID-19, Money, Superannuation
Published on July 23, 2020 6:10 am, by Pete Lalor
Updated: 23 July 2020
Economic impact of Coronavirus is now compassionate grounds for early access to Superannuation
The Government has introduced legislation to allow the economic impact of Coronavirus to be considered “compassionate grounds” for early access to Superannuation. Each person will be able to make two withdrawals of up to $10,000 each. One withdrawal had to be made in the 2019/20 financial year and another one can be made in the 2020/21 financial year.
It is now too late to apply for a withdrawal in the 2019/20 financial year. Applications for the 2020/21 financial year must be made between 1 July 2020 and 31 December 2020.
Amounts withdrawn from superannuation under these provisions will be tax-free and will not affect Centrelink or Veterans Affairs payments.
Applications for early withdrawal must be made to the Australian Taxation Office through the myGov website from mid-April 2020. You can already register your interest in making a withdrawal on the myGov website.
To apply, a person must satisfy one of the following requirements about their employment or business status:
At the time they apply they are:
Or, on or after 1 January 2020 the person:
It is expected that people will “self assess” their eligibility to make an application to the ATO.
The impact on your retirement savings
Obviously if you have lost your job or your income has fallen significantly due to COVID-19 being able to access up to $20,000 from your superannuation may be a critical lifeline. In making the decision to do it you need to consider a number of things including:
Estimating the impact of withdrawing up to $20,000 from your superannuation is difficult and depends on a number of things including:
You can use the Plan For Retirement feature in the MoneyBrilliant app to estimate the impact of making a withdrawal from your superannuation. Just sign up or download the MoneyBrilliant app, connect your super account and answer some questions about your age, retirement age, salary, contributions and investment options. You can estimate your retirement savings with and without the withdrawals and compare the difference. You can see more about the Plan For Retirement feature in MoneyBrilliant in this short video.
Be wary of organisations or people encouraging you to make an early withdrawal from your superannuation. Only a licensed financial adviser can make a recommendation to do this. You should also be wary of scams that involve superannuation. It is probably best to deal only with your financial adviser or directly with the ATO and your fund.
If you are thinking of making an early withdrawal from your superannuation fund we suggest you contact your financial adviser or your fund to discuss your options.
If you are concerned about the financial impact of COVID-19 or you are facing the uncertainty of losing your job or having your income significantly reduced we can help. Sign up to MoneyBrilliant and we will give you access to a host of tools and features to help you organise your finances and make better decisions about your money. We’ll also give you tailored insights about the financial assistance available from governments and businesses to help you face the economic and financial challenges caused by the COVID-19 pandemic.
This summary has been prepared by MoneyBrilliant Pty Ltd (ABN 34 153 932 766, AFSL 492711, ACL 493068). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) and the relevant product providers.
Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.