Australians have some tough decisions to make regarding their finances and how best to navigate the options made available to them by the Australian Government during the Covid-19 pandemic.
The government is allowing individuals affected by the coronavirus 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.
From mid-April 2020, eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for approximately three months.
“This should be as a last resort and an exceptional circumstances and we encourage anyone who is looking to withdraw from their super to seek advice from a licenced Financial Planner” according to Direct of Align Financial Services Jason Manolakakis.
Eligibility
To apply for early release, you must satisfy any one or more of the following requirements:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On
or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20% or more
- if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
Timing
You will be able to apply for early release of your superannuation from mid-April 2020.
How to apply
If you are eligible for this new ground of early release, you can apply from mid-April directly to the ATO through the myGov website. You will need to certify that you meet the eligibility criteria.
After we have has processed your application, we will issue you with a determination. We will also provide a copy of this determination to your superannuation fund, which will advise them to release your superannuation payment. Your fund will then make the payment to you, without you needing to apply to them directly.
If you are a member of a self-managed superannuation fund (SMSF) who is eligible, you can apply through myGov from mid April. We will then issue you with a determination advising of your eligibility to release an amount. When your SMSF receives the determination from you, they will be authorised to make the payment.
Temporarily reducing superannuation minimum drawdown rates
The government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019–20 and 2020–21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
The government is also reducing both the upper and lower social security deeming rates by a further 0.25 percentage points in addition to the 0.5 percentage point reduction to both rates announced on 12 March 2020.
| Superannuation changes | ||
| Age | Default minimum drawdown rates (%) | Reduced rates by 50% for the 2019–20 and 2020–21 income years (%) |
| Under 65 | 4 | 2 |
| 65 to 74 | 5 | 2.5 |
| 75 to 79 | 6 | 3 |
| 80 to 84 | 7 | 3.5 |
| 85 to 89 | 9 | 4.5 |
| 90 to 94 | 11 | 5.5 |
| 95 or more | 14 | 7 |
More information
For more information on the Australian Government’s economic response to coronavirus, visit treasury.gov.au/coronavirusExternal Link.
Businesses can visit business.gov.auExternal Link to find out more about how the economic response complements the range of support available to small and medium businesses.
Align Financial Planning Pty. Ltd We are currently offering online consultations with a Senior Financial Adviser.
Jason Manolakakis B.Bus(Acc.), Dip. F.P.
Financial Planner/Director
Align Financial Planning Pty. Ltd. ABN 456 097 60705
Authorised Representative of MFG Advice AFSL 499010
Email: jason@alignfp.com.au
Mobile: 0403 145 139
Finance Brokers
If you have any questions or concerns please feel free in getting touch with us.
Nirosh Weerasinghe 0401 976 188
Chamila Suraweera 0402 927 220
Shane Cross 0421 427 272
info@financecirclegroup.com.au
http://bit.ly/FinanceCircleGroup
Finance Circle Group is Finance Broker and NOT financial advisers or Financial Planners. This article is general and has not taken into account your objectives, financial situation, or needs. Consider whether any advice is right for you. You may need financial advice from a qualified adviser. Consider the product disclosure statement (PDS) before making any financial decision
