The Government intends to give people impacted by COVID-19 an extra three months to apply to access a second tranche of their superannuation.
As part of the COVID-19 response, the Government expanded the early access to superannuation rules to allow people who met certain conditions to withdraw up to $10,000 of their super in 2019/20, and a further $10,000 in 2020/21. As originally announced, people had until 24 September 2020 to apply for a withdrawal in 2020/21. But the Government intends to extend this until 31 December 2020.
The change was included in the Government’s Economic and Fiscal Update July 2020, but not otherwise announced. The changes will likely be made through regulations.
Labor Shadow Assistant Treasurer and Shadow Minister for Financial Services, Stephen Jones, accused the Government of making a “sneaky extension to the Government’s scandal-ridden robo-release early access super scheme”.
“Not only does Scott Morrison have no plan to create jobs and get Australians back to work, the Government have told Australians doing it tough that their only option is to raid their retirement savings.”
Jones noted that Treasury had estimated that 1.5 million people would access their super, but APRA figures show 2.8 million have already made withdrawals.
It was initially estimated that $27 billion would be withdrawn from super under the COVID-19 changes. However this is likely to be exceeded even before the extended time-frame to apply, with $25.3 billion in payments already made by 12 July 2020 according to APRA.
Industry Super Australia estimates that 480,000 people, including 395,000 under age 35, have “wiped out their super, even before the second tranche opens”.
The ATO has warned that it is devoting resources to fraud and schemes around the COVID-19 response. This includes applying to access superannuation without meeting the criteria, and “withdrawing and re-contributing super for a tax advantage – this could not only trigger anti-avoidance rules but also result in additional taxes and impact your eligibility for a super co-contribution”.