May 07, 2020 / News

COVID-19 / Superannuation

Early Release of Superannuation

Eligible members of super funds (including SMSFs) are able to apply for two amounts of up to $10,000 each. The first application can be made up to 30 June 2020, and the second application can be made between 1 July and 24 September 2020. Once an application has been made there is no scope for amending it, and only one application can be made in each period. Applications can be made online through myGov or by phone through the ATO call centre. There is no paper form.

In order to be eligible, the application must be made on the ground that the amount is required to assist the person to deal with the adverse economic effects of COVID-19, and the person satisfies at least one of the following conditions:

• the person is unemployed;
• the person is eligible to receive the Jobseeker payment, parenting payment, special benefit or youth allowance on the basis of undertaking full-time study or is a new apprentice;
• the person is eligible to receive household allowance;
• the person was made redundant on or after 1 January 2020, or their working hours were reduced by 20% or more; or
• the person is a sole trader and on or after 1 January 2020, their business was suspended or their business income suffered a reduction of 20% or more.

Once an application has been processed, the ATO will send a Determination to the member through myGov. In the case of an SMSF the member will have to advise the fund so the payment can be made. In the case of other funds, the ATO will send a copy of the Determination to the fund.

Early release payments can only be made from preserved or restricted non-preserved components of the member’s balance in the fund, and not from any accounts in pension phase. The payments are non-assessable non-exempt income, and are tax-free in the member’s hands.

Clients should think carefully and possibly obtain advice before applying for an early release, as superannuation is a long term investment, and early release now can have a significantly adverse effect on the amount available at retirement.

The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Nexia Edwards Marshall. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your Nexia Edwards Marshall Adviser.