The COVID-19 health pandemic has had a detrimental impact on many people both medically and financially. Many Australians have lost employment as a result of strict government measures aimed at flattening the curve for the transmission of the virus.
As a result of the clear financial impact that this virus has had on Australians the government has taken steps to increase accessibility to superannuation funds.
If you have been financially affected by COVID-19, you may be eligible to access your superannuation funds early.
The information as released through the Australian Taxation Office (ATO) relating to the COVID-19 early release of superannuation can be summarised as follows.
Eligible parties may be able to apply for release of $10,000 of their superannuation account balance for the 2019/2020 financial year and then a further $10,000 for the 2020/2021 financial year.
In order to be eligible to access your superannuation you need to be an eligible citizen or permanent resident of Australia or New Zealand. A citizen or permanent resident of Australia or New Zealand will be eligible for early release of superannuation when they meet one of the following circumstances:
- You are unemployed
- You are eligible to receive one of the following:
- jobseeker payment.
- youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice).
- parenting payment (which includes the single and partnered payments).
- special benefit.
- farm household allowance.
- On or after 1 January 2020 either:
- you were made redundant.
- your working hours were reduced by 20% or more (including to zero).
- you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more.
Specific conditions have been established for temporary residents to access superannuation funds under this scheme also. The criteria for access as a temporary resident is more limited than for a citizen or permanent resident.
To be eligible for early release of superannuation for the 2019/2020 financial year, temporary residents must be in one of the following circumstances:
- You hold a student visa that you have held for 12 months or more and you are unable to meet immediate living expenses.
- You are a temporary skilled work visa holder and still employed but unable to meet immediate living expenses.
- You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.
No provision has yet been made for the release of superannuation for the 2020/2021 financial year for temporary residents.
It is important to note that you can only submit one application for COVID-19 early release of super each financial year. Further, you are also entitled to apply for the early release of super due to COVID-19 even if you have accessed your superannuation under other circumstances for the same financial year, for example compassionate grounds and financial hardship.
There are implications to accessing superannuation that ought to be considered prior to any claim being submitted. Accessing your superannuation early will have a natural impact on your future retirement income. Further, accessing your superannuation early may impact your superannuation insurance cover, including but not limited to, income protection, death and Total and Permanent Disablement (TPD) insurance.
It is important to understand that releasing funds from your superannuation may affect ongoing insurance entitlements with your superannuation. This is particularly relevant when releasing all of your account balance and/or releasing a significant proportion of your account balance. A low account balance may impact on your superannuation insurance cover generally.
Each superannuation fund will have specific provisions and requirements for the continuation of insurance. It is important to discuss the impact that the release of account funds may have on any insurance benefits directly with the relevant superannuation fund and/or a qualified financial advisor.
After seeking appropriate advice should it be your election to pursue the early release of funds, applications for accessing your superannuation can be submitted to the ATO online through the MyGov website.
Applications for access to funds for the 2019/2020 financial year need to be submitted prior to 30 June 2020. Applications for access for funds for the 2020/2021 financial year need to be submitted between 1 July 2020 and 24 September 2020.
It is important to note that the information contained within this summary is general in nature and should not be taken as financial advice. We strongly encourage any reader considering accessing their superannuation benefits early to contact an appropriately qualified financial advisor to discuss your personal circumstances and options.
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For more information about Superannuation claims, contact our experienced lawyers at Turner Freeman for a confidential and obligation free discussion.
