Date of article: 24 March 2020
Last updated: 24 March 2020
The Government has announced measures to assist Australian. Those that relates to superannuation includes:
Temporary early access to superannuation
Reducing the minimum pension drawdown requirements
The Government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans' Affairs payments.
If you are eligible and wish to access your superannuation, including from your SMSF, your must ensure that you follow the require application process and apply through myGov to the Australian Taxation Office. The ATO has stated that eligible individuals will be able to apply through myGov from mid-April.
The ATO will issue a determination to the individual, and provide a copy of the determination to the superannuation fund directing the superannuation fund to release your superannuation to you.
If you are accessing your superanuation from your SMSF, you must not release the money until the SMSF is in possession of the determination from the ATO directing the SMSF to release your superannuation to you. Please provide a copy of the ATO determination to us for the fund's compliance reporting.
To apply for early release, you must satisfy any one or more of the following requirements:
The following example was provided from Treasury:
The fact sheet is available from Government website
Ed the bartender
Ed works in a popular bar in Melbourne. As a result of the Coronavirus, Ed has had his work hours reduced from 40 hours on average in the second half of 2019 to 20 hours per week on average in May 2020. As a result, Ed determines that his hours over the last month have reduced by more than 20 per cent compared to the average of his hours over the last six months of 2019.
Ed decides to apply for the early release of $8,000 of his superannuation in May 2020 to help pay his rent and other living expenses. Ed self-certifies that he is eligible for early release on myGov. He could have applied for up to $10,000, but chose not to. Ed cannot seek any further early release of superannuation in 2019-20 on the grounds that he has been affected by the adverse economic effects of the Coronavirus.
However, Ed finds after 1 July 2020 that his hours continue to be reduced by more than 20 per cent compared to the average of his hours in the last six months of 2019. Ed decides to make a second application and self-certifies through myGov that he is eligible for early release. He is able to apply again for a release of up to $10,000 of his superannuation. Ed submits a second application for the full amount of $10,000 this time.
For each application, the ATO approves Ed’s early release and notifies both him and his superannuation fund. Ed has received a total of $18,000 of his superannuation in two separate payments. He will not be taxed on this amount and is free to spend this money on anything he chooses, or save it for future expenses. He is also free to recontribute any unused amounts to his superannuation in the future (within his contribution caps).
Rachel the sole trader
Rachel is a sole trader with a catering business. At the end of July 2020, Rachel seeks to apply for an early release from her superannuation for the 2020-21 financial year.
Due to the economic effects of the coronavirus, Rachel’s turnover for July is $5,000 compared to $10,000 on average per month for the second half of 2019. Rachel therefore determines that her turnover has reduced by more than 20 per cent compared to her average turnover over the last six months of 2019.
Rachel self-certifies that she is eligible for early release and applies to have $10,000 released from her superannuation.
The Government is reducing the minimum annual pension drawdown requirements for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities by 50 per cent for the 2019-20 and 2020-21 income years.
The calculated minimum annual payment required at 1 July each of the above years, based on the account balance of the member or annuitant, is reduced by 50 per cent.
For pensions and annuities that commence part-way during the 2019-20 or the 2020-21 financial year, the 50 per cent reduction applies to the minimum annual payment that is calculated proportionally on the account balance on commencement day.
If a member has already withdrawn amount over the new reduced minimum annual pension amount, the member cannot put that excess amount back to the superannuation fund (unless that member is all requirements to be eligible to make superannuation contributions).
|Age (on 1 July or commencement)||Normal Minimum pension %||Reduced rates by 50 per cent for the 2019-20 and 2020-21 income years %|
|Under age 65||4%||2%|
|65 – 74||5%||2.5%|
|75 – 79||6%||3%|
|80 – 84||7%||3.5%|
|85 – 89||9%||4.5%|
|90 – 94||11%||5.5%|
|Age 95 and over||14%||7%|
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