Measures to assist superannuants due to covid-19

As part of the Government’s response to Covid-19, on the weekend the Government introduced two measures to assist superannuants with cash flow and liquidity needs.

 

Temporarily reducing superannuation minimum drawndown rates

The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and transition to retirement pensions, by 50% for 2019-20 and 2020-21.

This measure, as introduced during the 2008 Global Financial Crisis, will benefit retirees by reducing the need to sell investment assets to fund minimum drawdown requirements.

If you have already withdrawn the minimum pension amount in 2020, or amounts in excess of the minimum pension, you are not eligible to put the excess withdrawn amount back into super under these measures.

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Temporary early release of superannuation

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.

 

Eligibility

To apply for early release you must satisfy one or more of the following requirements:

  • You are unemployed; or

  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment, special benefit or farm household allowance; or

  • On or after 1 January 2020;

    • you were made redundant; or

    • your working hours were reduced by 20 per cent or more; or

    •  if you are a sole trader – your business was suspended or there was a reduction in your turnover of 20 per cent or more.

 

Application

For retail and industry super funds, the application process will be via the ATO through the myGov website.

Separate arrangements will apply if you are a member of an SMSF. Further guidance has yet to be established for SMSF’s. We will communicate these to you when they are made available.

 

Timing

You will be able to apply for early release of your superannuation from mid-April 2020.

COVID-19Cristy HoughtonBush & Campbell Accountants