This week the ATO provided an update on the timing and application process for the $10,000 early release of super including how it applies to members of SMSFs. This article is essential reading for any SMSF members who are eligible for the early release payments and are considering applying. The latest you can apply to release $10,000 from your super fund is 31 December 2020.
COVID-19 – Early Release of Super Applications Open Monday, April 20
Applications for early release of superannuation (super) will be accepted through ATO online services in myGov from 20 April.
On Monday 20 April 2020 you will be able to apply by logging in to your myGov account and following the instructions under the ATO section. If you don’t already have a myGov account, you can set one up by selecting ‘create an account’.
With up to 1 million people expected to apply for early release of super (including SMSFs members), it’s likely the myGov system will experience some delays due to the volume of applications.
Importantly, members of SMSFs must follow the same application process as members of APRA regulated (retail and industry) superannuation funds.
Summary of the early release of super SMSFs measure
The government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and will not need to include it in their income tax return.
Eligible Australian and New Zealand citizens and permanent residents will be able to apply to access up to:
- $10,000 of their super before 1 July 2020
- a further $10,000 from 1 July 2020 until 31 December 2020.
To apply for early release, you must satisfy one or more of the following requirements:
- You are unemployed.
- You are eligible 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.
- On or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20% or more
- if you were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
COVID-19 early release of super for temporary residents
The government has also announced that eligible temporary residents will be able to apply to access up to $10,000 of their super before 1 July 2020.
To apply for early release as a temporary resident, you must satisfy one or more of the following requirements:
- You hold a student visa which you have held for 12 months or more and you are unable to meet immediate living expenses.
- You are a temporary skilled work visa holder, your working hours have reduced to zero and you remain engaged with your employer
- You are a temporary resident visa holder (excluding student or skilled worker visas) and you cannot meet immediate living expenses.
Evidence required for early release of super payments
You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.
Evidence may include payslip showing hours reduced if you are an employee or a notice of termination or redundancy from your employer.
Sole traders need to be able to show via their records (financial statements, accounting records, business activity statements etc) that their income has reduced by at least 20%.
In addition to administering the applications for early release of super, the ATO will also be able to conduct reviews and utilise they data they collect from other sources such as personal income tax returns, activity statements and potentially single-touch payroll data to identify individuals who have inappropriately and illegally accessed their superannuation benefits early where they we not eligible.
How long do payments take?
Once you’ve lodged your application, the ATO will send a notification to you via your myGov account in regards to your application has been accepted and passed onto your superannuation fund or whether your application has been rejected. This is expected to occur with 2-3 days after the application is made.
It’s then expected that superannuation funds pay the money ‘as soon as practicable’ and APRA (who oversees the large superannuation fund trustees) has said payment is expected to happen within 5 business days. This means it will take a week at the earliest for the $10,000 (or lower nominated amount) to hit an individuals nominated bank account.
How do payments work for SMSF members?
The application and approval process is exactly the same of SMSF members – apply via myGov and wait for the ATO to issue their confirmation notice. See below for an example of what the letter looks like.
Once the notification is received from the ATO, a copy should be downloaded (assuming a PDF letter) or as a minimum a screen shot taken and provided to your accountant or SMSF provider (such as Superfund Partners). This is essential evidence that will needed to be provided to the independent auditor of the fund when the 2020 SMSF accounts are audited.
Our independent auditor partners have more information on audit evidence and what they expect here: COVID-19 Early Release Requirements for SMSF Audit
To process the payment and generate all the necessary trustee minutes and other records relating to the early release lump sum, Superfund Partners is required to charge a nominal fee of $165 as per our standard fee schedule.
ATO Letter: We have approved an early release of superannuation
Watch out for scams
The ATO has notified us of an increase in scams relating to the early release of super. The ATO is concerned about scams or schemes where people:
- impersonate the ATO, or a trusted organisation like your super fund, to steal your money or personal identifying information
- contact you and charge for services that are free, like gaining early access to your superannuation.
If you receive a phone call, text message or email offering to help you release your super early, do not:
- provide your personal information
- click on any links
If you have any concerns about communication you believe is not genuine, please contact the ATO.