Members withdrawing super as a result of the federal government’s recent early release measure should be allowed to make a “COVID-19 replacement super contribution” on top of current limits after the economic situation has improved, a specialist auditor has said.
Elite Super managing director Katrina Fletcher said individuals who access their super early under the government’s coronavirus relief provisions should be given the option to top up their super once the crisis has passed without being subject to the limits currently in place.
“It’s a way of people topping back to super what they took out to survive in 2020. When SMEs (small to medium-sized enterprises) are back on their feet again, hopefully soon, they can benefit from a special contribution back to super. They don’t have to, but it should be made an option,” Fletcher told selfmanagedsuper.
Allowing such contributions to be made without the usual limits being applied would help alleviate any SMSF industry concerns regarding the impact of the government’s early release measure on super, she noted.
“The government is doing a great job here and no one would deny that. So are the banks, so let’s pray we won’t need to dip further into super than the expected [$10,000 in the current and next financial year],” she added.
“However, let’s not take this option off the negotiation table either. If we need to allow people to access more super to keep the economy going, the government should be able to sit with the industry and have a meaningful discussion about that.
“Yes, the sole purpose test is there, but it might need to take a backseat for a while to get us through the crisis. I think the industry should agree not to argue about long-term effects to super when this is such a huge economic crisis.”
Earlier this week, Heffron head of SMSF technical and education services Lyn Formica warned superannuation fund members not to ‘game’ the temporary early release provisions, adding the ATO would be watching their use very closely.