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Explainer: COVID-19 Economic Response Package – Early Release of Super

In response to the ongoing coronavirus crisis, the Australian Government recently announced and introduced a number of stimulus measures to assist Australian’s adversely impacted by the crisis. One of these measures allows individuals to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. This article provides a brief outline of the new legislation and explains how those who qualify for the scheme will be able to access it.

What is the new legislation?

The new early release provisions are found in Schedule 13 of the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (‘the Act’). Schedule 13 to Act amends the SIS Regulations and RSA Regulations to allow individuals affected by the adverse economic effects of Coronavirus to have up to $10,000 released from their superannuation or retirement savings account on compassionate grounds. Each person is permitted to have up to two releases – one in the 2019-2020 financial year, and another in the 2020-21 financial year.

Who is eligible for the early release of super?

Under the current law, Items 107 and 207 in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 (‘SIS Regulations’) provide conditions of release on compassionate grounds. The Act does not fundamentally alter the existing legal framework that governs how amounts are released from a person’s superannuation or retirement savings accounts on compassionate grounds. Rather, the Act functions by expanding the grounds on which a person may have amounts released. This is achieved by expanding the definition of ‘compassionate ground’ to include the following:

  • People who are unemployed;
  • People who are eligible to receive the jobseeker payment, parenting payment or special benefit;
  • People who are eligible to receive youth allowance;
  • People eligible to receive the farm household allowance;
  • People who on or after 1 January 2020 were made redundant or had their working hours reduced by 20% or more; and
  • People who are sole traders who on are after 1 January 2020 had their business suspended or suffered a reduction in turnover of 20% or more.

How much can a person apply for to have released?

Individuals can apply for up to $10,000 in both years (2019-20 and 2020-21) for early release. People can apply for an amount of less than $10,000, however individuals can only make one application in each financial year. For example, a person that makes an application in 2019-20 for the release of $5,000 cannot make a subsequent application for the release of an additional $5,000 in that same year.

What is the application process?

The Australian Taxation Office (‘ATO’) will be rolling-out the application form for individuals on Monday 24 April. Applications for the 2020-21 financial year will be able to be made up until 24 September 2020. An application can be made through MyGov. For those that cannot access online services, they will be able to call the ATO to make an application.

People accessing the scheme will first need to verify their identity, before certifying that they are eligible for the early release. After this, an applicant will review a list of their open accounts which will display the last account balance reported for each account (this will usually be from 30 June 2019). The process will then involve the person nominating the accounts and amount that they would like released. As long as the total sum being released does not exceed $10,000, there is no restriction on money being released from multiple accounts. The person will then be prompted to input their bank account details for payment. The final step in the application process will involve the individual authorising the ATO to contact the person’s super fund for the money to be released.

How long will the process take?

Whilst this is unclear, the ATO states that it will take approximately 1 to 2 business days for super funds to receive notifications for release about their members. The ATO expects that funds will start receiving notifications from as early as Tuesday 21 April, with the government expecting payments to be made by funds as soon as possible.

If you would like more information regarding the early release of super, or other advice about superannuation, please contact us.

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