One of the measures that the Federal Government introduced to assist those whose incomes have been affected by the Covid-19 lockdowns, was a ‘hardship’ provision allowing partial early access to superannuation.
The three main eligibility criteria are: being unemployed, being in receipt of a Centrelink benefit, or having suffered a drop in income of over 20%.
Up to $10,000 can be withdrawn tax-free prior to 30 June. If eligible, another $10,000 can be withdrawn early in the new financial year, with the cut-off date for applications being 24 September 2020.
Applications are being processed through the myGov website. Once approved, super funds are then instructed to pay the funds to your nominated account. For members of SMSFs, the process may involve additional steps, such as selling down investments to fund the withdrawal and actioning the bank transfers.
Many superannuation and investment commentators are advising people to only make these withdrawals if they are absolutely necessary. Depending on your age and the potential returns on your investments, raiding $10,000 now might cost you anywhere between $30,000 to $60,000 at retirement.
If you have any questions in relation to superannuation withdrawals, or require assistance, please don’t hesitate to give us a call.