Tax & Super Australia members who have clients contemplating an early withdrawal of super under the COVID-19 support measure should advise their clients that there is only a small window in which people can access their superannuation under the Federal Government’s superannuation withdrawal concession. Applications for release of up to $10,000 superannuation savings must be made before 1 January 2021.
John Jeffreys, Senior Tax Counsel of TSA, says: “If you want to receive your superannuation money before Christmas, the ATO says that you must apply online before 11 December 2020.”
If taxpayers apply through ATO online services in myGov before 11 December 2020, the ATO says in most cases this should allow enough time for it to process their application. Note that if early release is based on compassionate grounds, the deadline is 4 December. Applications cannot be accepted after 31 December. If clients have trouble applying online, there is one more last minute window of opportunity where they can call 1300 662 211 for assistance between 29 and 31 December 2020 (10.00am and 6.00pm AEDT).
A person can only apply once to obtain superannuation money. To apply for the release of superannuation, an individual must be eligible. This requires the person to have access to their superannuation to deal with the adverse effects of COVID-19.
In addition, the person must be unemployed or eligible to receive one of a number of government allowances, including JobSeeker payments. Alternatively, after 31 December 2019, the person must have been made redundant or had their working hours reduced by 20% or more.
Business owners can also withdraw superannuation. The business owner must be a sole trader and the business was suspended or there was a reduction in turnover of 20% or more. Partners in a partnership are not eligible unless the partner satisfies any other of the eligibility factors.
The ATO warns that those wanting to access their superannuation must be able to prove that they are eligible if asked by the ATO. “Withdrawing money from your superannuation account is not something that should be done without serious consideration and, if needed, after taking advice,” says John Jeffreys. “Although the money might give you a better Christmas in 2020, withdrawing your superannuation savings might mean poorer Christmases when you retire.”