From 1 July until 24 September 2020, eligible Australians can access a further $10,000 of their superannuation. This is part of the government’s original coronavirus response from March, when the severity of the pandemic first became evident.
Eligibility for these payments is determined on a self-assessment basis. Fund members must first apply to the ATO through the myGov website. Once the member certifies that they meet the eligibility criteria, the ATO will issue a determination advising the member’s eligibility. The trustee must ensure that the member is eligible for the early release; it should not make payment before receipt of the determination from the ATO.
From the above, it should be apparent that fund members thinking about accessing a further release of their superannuation entitlements must first reassess and verify that they are still eligible. They should not assume that they remain eligible for a second release in July simply because they were eligible for the first release in April.
Various eligibility criteria apply. Members must be either unemployed, have had their working hours reduced by 20% or (in the case of sole trader) have seen a reduction in turnover of 20% as a result of the pandemic. There are some nuances to these criteria.
At the time that the member makes the application, they must satisfy the above criteria. Australians who have seen their working hours or turnover return to something like pre-Covid levels may now be unable to access their super for a second time. Members who have returned to full-time work will no longer be eligible. Similarly, employees who have started a new full-time job will also be ineligible, notwithstanding the fact that their income in their new position may be less than what they had earned in their original job.
Failure to comply with the eligibility criteria may result in the ATO withdrawing the determination given to the fund trustee, and then treating the released super payment as assessable income subject to income tax at the recipient’s marginal rate.
SMSF trustees should document any early access. In particular, they should ensure evidence establishing the member’s eligibility for such a payment is kept on file.
If you don’t intend to access your superannuation, you should ensure that younger family members understand that they should only access their own superannuation when absolutely essential.
The majority of Australians accessing their super have been under 40, with some members withdrawing their entire balances. Anecdotal evidence suggests a large amount of super has been used to fund discretionary spending. Considering a 25 year old who accesses $10,000 now is expected to be $49,000 poorer in retirement as a result, it’s important everyone understands the true cost of a plate of smashed avocado purchased with super money.
If you have any questions, or would like to know more, please email our Legal Senior Associate Christian Chenu or call 1800 333 143.
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