ATO, Superannuation

Demand for early super access high

Early release super

Over 350,000 registrations of interest in the COVID-19 early release of super relief measure have been received by the ATO as at the beginning of April.

More than 360,000 individuals have registered their interest in the recently announced early release of super relief measure for those affected by the coronavirus pandemic, the ATO has revealed.

In an update on its website, the regulator said it had received a total of 361,000 registrations of interest as at the end of 2 April, but did not anticipate every individual who had registered their interest would go ahead with an application to withdraw their super in line with the new COVID-19 temporary relief measure.

“In terms of the number of people registering, this should be used as a high-level indicator of volumes of those who may eventually apply for early release of their super only,” the ATO pointed out.

“Registration of interest does not mean an individual will later complete the application process.”

In related news, ASF Audits technical services executive manager Shelley Banton urged SMSF advisers and trustees to use the early access relief measure in the spirit it was intended and not view it as a potential opportunity to further their own interests through the use of recontribution strategies.

“While such strategies are technically correct and have previously existed during the good [old] TRIS (transition-to-retirement income stream) days, they are not in the spirit of a law designed ‘to assist the person in dealing with the adverse economic effects of the coronavirus’,” Banton said in a blog post on the ASF Audits website,

ATO client engagement group second commissioner Jeremy Hirschhorn also warned against taking advantage of the early access relief measure unless there was a genuine financial need.

“We are aware of super recontribution schemes relating to COVID-19. We ask that individuals, tax agents and businesses be mindful that it is not acceptable to apply for relief payments or benefits where eligibility may be questionable,” Hirschhorn said in a post on LinkedIn.

“Applications for relief through stimulus measures based on artificial arrangements will see the ATO take swift action.”

Last week, the SMSF Association cautioned against the reckless use of the government’s measure to allow early access to super benefits for individuals suffering financial adversity stemming from the coronavirus pandemic.

“We would encourage people to look for other sources of financial support before they turn to releasing their superannuation because it is effectively going to be a trade-off between current consumption against future retirement savings for future consumption,” SMSF Association chief executive John Maroney said during a webinar for members.

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