You can access up to $10,000 of your super in the 2020-21 financial year if adversely affected by the COVID-19 pandemic. This includes if you are a member of an SMSF. The amount you receive is tax-free (it is non-assessable non-exempt income).
The deadline for making an application is now 31 December 2020 (it was originally 24 September 2020). Applications received before 31 December 2020 may be processed after that date.
Applications for COVID-19 early release of super in the 2019-20 financial year closed on 30 June 2020.
To apply for early release, you must:
- be unemployed;
- be eligible to receive a jobseeker payment (previously called newstart allowance), youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020, have been made redundant or had your working hours reduced by 20% or more or, if you are a sole trader, your business must have been suspended or suffered a reduction in turnover of at least 20%.
You can make an application using ATO online services (through myGov). If you have more than one super fund, there are no restrictions on the amount you can request for release from any account, except the $10,000 overall yearly limit.
You can only apply for one determination for 2020-21. You can request (say) $1,000 from one fund and (say) another $9,000 from another fund as long as it is in the same application.
You cannot make a subsequent application if you do not request or receive the full amount that has been approved in your first application for 2020-21.
You self-assess your eligibility for COVID-19 early release of super. You must be certain you are eligible. If the ATO subsequently determines you were not eligible, the amount of super released to you will be included in your assessable income and taxed at your marginal tax rate.
Tip! Use this measure as a last resort. Money taken from your super fund now will reduce the amount available once you retire.
Don’t forget SMSF trustees are responsible for the members’ retirement savings. If you are an SMSF trustee, please make sure the member is eligible for early release of super before you release any funds.
Pensions and annuities – minimum drawdown amounts
To assist retirees, the government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities. The minimum amounts have been reduced by 50% for the 2019-20 and 2020-21 financial years.
If the minimum drawdown amount has already been paid, payments can be stopped for the remainder of the year. If you have received more than the minimum drawdown amount, you can recontribute these amounts if you are eligible to make superannuation contributions (subject to other rules or limits such as contributions caps).
Tip! Speak to your financial adviser before making any decisions affecting your super.
Read our complete September 2020 Taxwise Individual Newsletter here