The Government is making two changes to superannuation in response to the Coronavirus pandemic.
The pension minimum percentages for this year and next will be halved. This will allow a lesser payment to be taken but, where there will now be unexpected withdrawals in excess of the new pension minimum, a reassessment of the nature of any payments over the new minimum must be made given that pension payments do not reduce the members transfer balance account whilst lump sum withdrawals do. We will make the necessary adjustments to our SMSF toolbox alerts when the measures have passed into law.
The second change is a relaxation to the existing early access provisions, allowing access to up to $10,000 in super savings in both this financial year and next.
Eligibility requires any one or more of the following;
- unemployment; or
- eligibility to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- on or after 1 January 2020: redundancy; or
- a reduction to working hours of 20 per cent or more; or
- for sole traders — business was suspended or there was a reduction in turnover of 20 per cent or more over the last six months (this time frame could be less if sufficient evidence is provided.)
APRA fund members will be able to apply online through myGov. The ATO will provide a copy of their favourable determination to their super fund which will make the payment directly. The ATO are yet to advise the procedure for SMSFs.
Withdrawals will be tax free and will not affect Centrelink or Vets’ Affairs payments.
Only one application will be allowed in each year. If the full $10,000 is not applied for this year, the member cannot subsequently apply for the balance remaining this year but may apply for the full $10,000 again next year.
These measures are expected to be operational by mid-April.
