Do you need help with information about getting your super out early due to the impact of Corona Virus?
If you are one of thousands of Aussies needing to access their super during the Coronavirus effects, below are some practical instructions to help you, along with some commonsense that you should consider before doing so.
How much can you get out of your super?
The temporary measure will allow super account holders to access up to $10,000 of their money in this financial year, and a further $10,000 after 1 July, 2020 (until 30 June 2021). These funds would not be taxed after they are withdrawn, according to details listed in the Bill. However, anyone who believes that they will need both these amounts need to apply within six months of the 20 April start of the scheme.
“While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the Coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement,” the ATO fact sheet states.
Before you act on accessing your super, take the time to look at the pros and cons. A good article from the ABC outlines a few issues HERE.
Are you eligible for early release of your super?
To apply for early release, you must satisfy one or more of the following requirements:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20% or more
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.
So, how do you apply?
- Go to myGov, access the ATO service portal
- Apply for the COVID-19 early release super payment, ensuring that you can “certify that you meet the above eligibility criteria”, which typically includes providing payslips or other documents as evidence (further detail is expected to be released about this)
- The ATO will issue you with a “determination” – a decision on your eligibility
- If you are eligible, the ATO will send that determination statement to your super fund, advising the fund to release your payment
- The fund will then make the payment to you “without you needing to apply to them directly”
What are the downsides?
- A 20-year-old who accesses the full $20,000 available under the scheme could lose more than $120,000 from their retirement balance.
- A 30-year-old who accesses $20,000 from super now could lose about $100,000 when they hit retirement
- A 40-year-old could lose more than $63,000 from their retirement balance.*
You can also see alternative grants and assistance from the federal government HERE
For more information or see FAQ's about life insurance and income protection. If we can help connect you with other professionals, please connect with us below.
*As outlined in an article from Canstar.com.au