Early release of super due to COVID-19 (coronavirus)

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Question: One of the members of my SMSF wants to apply for release of their super under the COVID-19 early access arrangements, what do I do?

Answer: Your member can apply for release of their super under the COVID-19 early access arrangements through myGov. We will then issue them with a determination advising of their eligibility to withdraw an amount. When you receive the determination from your member, you will be authorised to release the amount of super stated in the determination. If the current balance of the member’s account is less than the amount approved in the determination, you can release the lesser amount.

The amount is not subject to PAYG withholding and does not need to be reported on a PAYG payment summary.

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.

Watch out for scams

The Australian Competition and Consumer Commission (ACCC) has warned about companies that are cold-calling people claiming to be from organisations that can help you get early access to your funds.

“For most people, outside of their home, superannuation is their greatest asset and you can’t be too careful about protecting it,” says ACCC Deputy Chair Delia Rickard. “The Australian Tax Office is coordinating the early release of super through its MyGov website and there is no need to involve a third party or pay a fee to get access under this scheme.”

Eva Scheerlinck, CEO of AIST (Australian Institute of Superannuation Trustees) said everybody needed to be on their guard if they receive unsolicited calls about their superannuation.

“Unfortunately, as we’ve seen before with any early release super measure, there are unscrupulous operators who take advantage of people in financial hardship either through outright fraud in an attempt to steal their super or by offering unnecessary services for which a fee is charged.” Ms Scheerlinck said.

In most cases the scammers try to obtain personal information to help them fraudulently access the victim’s superannuation funds. In 2019, Australians lost more than $6 million to super scams with people aged 45-54 losing the most amount of money.

“While older people are more commonly affected by superannuation scammers, the new early-access scheme means a range of age groups are now experiencing these scams,” says Ms Rickard.

“Be wary of callers who claim to be from a government authority asking about your super. Hang up and call the organisation directly by doing an independent search for their contact details,” Ms Rickard warns.

Any suspicious behaviour relating to superannuation can be reported to Australian Securities & Investments Commission (ASIC) through its online complaint form.