Superannuation is a compulsory payment an employer makes to your retirement fund. Normally you are not allowed to access your super until you reach 60, but a new scheme to help with the financial impacts of COVID-19 means you’re eligible to take out up to $20,000 early if you have lost 20% of your hours or business, if you’re unemployed or if you’re on another Centrelink payment such as jobseeker.
You may be entitled to access $10,000 this financial year (before 30th June) and another $10,000 between July and September 2020. This early access money will be tax free and you do not have to take the full entitlement.
Almost 500,000 Australians have applied to the scheme to access their superannuation early, taking out nearly $4bn due to coronavirus. For younger workers who urgently need the money now, tapping into their super early is very tempting, but it could lead to thousands of dollars less in their future retirement fund due to potential interest and investment losses in the long term and the possibility of a longer working life.
Here are other options to consider first, before raiding your super:
- Help through the Government’s Jobkeeper or jobseeker schemes and the two one-off cash payments of $750 for some people. Different states will also have their own support payments.
- Hardship loans or personal loans through the banks.
- Electricity or gas suppliers may offer hardship arrangements.
If you’d like to discuss any of the issues above, contact your local TaxAssist Accountant.
Date published 05 May 2020 | Last updated 31 Jan 2025
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
