Economic Response Package: Cracking open your nest egg early

The government is allowing eligible citizens or permanent residents of Australia and New Zealand to apply for up to $10,000 to be released from their super nest egg prior to 30 June 2020 and apply for an additional $10,000 to be released between 1 July 2020 and 24 September 2020. These are tax free withdrawals.

It is important to note under this measure, the eligibility to withdraw funds from your super is self-assessed. It appears that the ATO is not currently verifying your application and will automatically send instructions to your superannuation fund to release the funds once you’ve applied. However, in time the ATO will review applications carefully and those caught fraudulently accessing their super, or taking advantage of this measure to derive tax benefits, will be caught, fined and dealt with accordingly.

To apply for early release of your super one of the following circumstances must apply:

1) You are unemployed

2) You are eligible to receive one of the following:

  • JobSeeker payment
  • youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice)
  • parenting payment (which includes the single and partnered payments)
  • special benefit
  • farm household allowance.

3) On or after 1 January 2020 either:

  • You were made redundant
  • Your working hours were reduced by 20% or more (including to zero)
  • You were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more.

The application for this release can only be made personally on the ATO Online Services portal via your MyGov account.

Before deciding to accessing your super early consider:

  • alternative financial support you may be able to access
  • do the sums on the longer term impact of drawing down your balance early and
  • make sure you are able to maintain insurance cover.

Treasury has published a number of Economic Response to Coronavirus Fact Sheets at treasury.gov.au/coronavirus/households.

There are currently COVID-19 (Coronavirus) themed phishing emails and text messages in circulation. If you are approached about paying a fee to release your super, even though you think it’s from a trustworthy source, it’s likely to be a scam. Remember to keep your details private and devices protected with strong passwords. If you think you’ve been compromised, contact your superfund and the police. Stay informed about current threats and scams by signing up to the Stay Smart Online Alert Service or visiting the Scamwatch website.

We are here to help, please contact our superannuation specialist Ken Yew +61 3 9820 6400 if needed.