Australians who were financially affected by the coronavirus shutdown will have another chance to dip into their retirement savings.
Those hardest-hit by the COVID-19 crisis will be allowed to access an additional $10,000 from their superannuation when the 2020-21 financial year begins on Wednesday.
But because the scheme relies on ‘self-reporting’, the Australian Taxation Office has warned those who aren’t honest will face heavy fines.
Those hardest-hit by the COVID-19 crisis will be allowed to access an additional $10,000 when the 2020-21 financial year begins on Wednesday
Are you eligible for early release of superannuation up to $10,000
Australians must fit at least one of these three conditions to be eligible for the early release of superannuation scheme
1. You must be eligible or already receiving government assistance such as JobSeeker payments, youth allowance, special benefit or farm household allowance.
2. You lost your job on or after January 1, 2020, or had your working hours cut by at least 20 per cent.
3. You are a sole trader who had their business suspended or shut down by the coronavirus crisis, reducing turnover by 20 per cent or more.
Applications for early super access open July 1 and are available until September 24 via the MyGov website
‘If you are unable to demonstrate your eligibility when we ask for evidence we may revoke the determination that we issued in respect to your application,’ Australian Taxation Office’s deputy commissioner Will Day said.
‘This means the amount paid to you under COVID-19 early release of super will become assessable income and need to be including in your tax return and you will pay tax on the released amount.’
More than 2.3million hard-hit Australians have applied to access their retirement savings when the federal government announced the scheme in April.
The extreme measure was brought in to cushion the economic fallout of the COVID-19 pandemic.
The latest figures from the Australian Bureau of Statistics revealed about that 980,000 jobs have been lost as a result of coronavirus lockdown restrictions, bringing the unemployment rate to 7.1 per cent
As a result, a total of $18.5billion dollars were withdrawn in the first round of the scheme.
Australians are urged to consider the long term ramifications before accessing their super before retirement. Pictured is a Sydneysider getting an early morning workout on Monday
Assistant Minister for Superannuation Jane Hume said the scheme helped Australians support themselves at a time of great financial uncertainty and provided a much-needed financial lifeline to those in need.
But Industry Super Australia chief executive officer Bernie Dean had a dire warning, especially for those who have accessed their super recently.
A 35-year-old who withdraws $10,000 now will see a $19,411 reduction in their super when they retire at 67, according to the MoneySmart calculator.
‘It does come with a pretty hefty price tag … but we recognise that young people don’t necessarily think about the long-term,’ Mr Dean told News Corp.
‘We also recognise they may not be in a position to make up the lost ground themselves.
He warned early withdrawals can ‘wipe out’ your life and income protection cover if your super balance falls low.
More than 2.2 million Australians have dipped into their super since April after falling on hard times during the coronavirus pandemic (pictured are Centrelink queues in Melbourne)
Association of Superannuation Funds of Australia’s chief executive Dr Martin Fahy agreed and believes early release should be considered as a last resort.
‘Drawing down on your super early will have a substantial impact on your long-term retirement savings and the more you take out the greater that impact will be,’ he said.
If you decide to withdraw from your super, Dr Fahy advises to make those funds last as long as possible and only spend it on necessities.
Applications for early super access open July 1 and are available until September 24 via the MyGov website.
Australians can only access their super if they’re unemployed, are eligible to receive a job seeker payment, have been made redundant since January 1 or had their work hours reduced by at least 20 per cent.
The MoneySmart website advises Australians to seek government assistance and speaking to their bank or lender about possible financial assistance before dipping into your super.
Cash-strapped Australians will get an other opportunity to access their super from July 1