The federal government has allowed for the early release of superannuation and a temporary reduction in minimum pension drawdown rates as part of the second stage relief plan to curb the economic impact of COVID-19.
As part of its $66.1 billion economic support package announced on the weekend, the government said it would allow individuals under financial stress as a result of COVID-19 to gain early release of up to $10,000 of their superannuation in 2019/20 and an additional $10,000 in 2020/21.
“Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months,” it said.
“They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
“This measure is estimated to cost $1.2 billion over the forward estimates period.”
The government also said it would temporarily reduce superannuation minimum drawdown rates for account-based pensions and similar products by 50 per cent for 2019/20 and 2020/21.
“This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets,” it said.
In order to bring social security deeming rates in line with the latest rate reductions by the Reserve Bank of Australia, deeming rates would be reduced by a further 0.25 per cent in addition to the rate changes made at the time of the first package announced by the government, it added.
“As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent,” it noted.
“The change will benefit around 900,000 income support recipients, including age pensioners.
“This measure is estimated to cost $876 million over the forward estimates period.”
The government also committed to providing eligible small and medium-sized businesses up to $100,000 with a minimum payment of $20,000 in an effort to help businesses retain staff.
Since this announcement, the ATO has released details of how SMSF trustees and members can gain early access to their superannuation benefits.