Covid-19 superannuation access – only for those who really need it

The Government’s allowance of the early release of super has been a pivotal component of its economic stimulus response to the coronavirus pandemic. But you must only access it if you need to.

And here’s why.

By Julie Nipperess.

In recent days the Australian Tax Office (ATO) has announced that it will be scrutinising all Covid-19 superannuation drawdowns to make sure that those who released funds early from their super funds, meet the full eligibility criteria for doing so.

Super word written on wooden cubes

The criteria:

  • you are unemployed; or
  • 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; or
  • on or after 1 January 2020: you were made redundant; or your working hours were reduced by 20 per cent or more; or if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.

Anyone who has already accessed their super and was under the impression that checks and balances were in place, is mistaken.

Despite the fact that you might have ticked all the boxes and already received the funds, the scheme was rolled out pretty quickly, and it relied on those individuals applying for funds to read the criteria, get professional advice, and to ensure they met the full criteria.

Emergency money

Emergency money


Superannuation is supposed to be a savings plan for retirement. It was introduced so that none of us have to rely on the government when we stop working. As such, giving people access to these funds was unprecedented in Australian superannuation history. It’s also unlikely to ever happen again, but given the uncertainty of the pandemic and the accompanying recession the initiative was a terrific idea for people who had significant reductions in income or lost their jobs entirely and had no other financial safety nets.

In essence, it was meant to be ‘emergency’ money. And a last resort.

Unfortunately, many people took advantage of the scheme, accessing funds unnecessarily, and now the ATO is undertaking an extensive data matching programme to catch anyone who accessed funds without strictly being entitled to.

Woman checking an electricity bill

ATO crackdown


The ATO is also looking for individuals who have used the scheme as a tax dodge by contributing money to their super at a reduced tax rate before withdrawing it.

There are laws in place to enable the ATO to collect this data from a variety of sources, and to enforce penalties, so make no mistake, cheats will be caught.

Happy senior couple have fun at the beach

If you’ve done the wrong thing, fess up


Right now, the ATO is urging anyone who applied for early release of superannuation but has realised they were not eligible, should make a voluntary disclosure as soon as possible.

And if you’ve made a genuine error, then the ATO has promised that it will be understanding – these afterall, are unprecedented times.

The best advice though, if you haven’t already, is to engage a tax professional. The ATO definitely has a preference for dealing with tax agents because they understand the regulations, and the tax system, and they speak the tax jargon lingo. It also saves you from spending valuable time dealing with it.

Young couple managing finances

If you are eligible for $10k super, think twice


We’re not entirely out of the woods with Covid-19 just yet, so if your circumstances change and if you find yourself in dire straits, then you are still able to access early release of super funds this financial year.

But beware, the ATO is watching very carefully.

Even if you find yourself eligible for early release of super, do think twice. There are pros and cons of pulling out the money, and the decision needs to be made very carefully because it will affect your future finances.

If we can help, contact us.

This is general advice and should not be treated as personal advice.
Julie Nipperess is an authorised representative of Step Up Financial Group Pty Ltd ASFL No: 512509.

Need more information? Get in touch with Step Up Financial