The scheme allowing early release of superannuation due to COVID-19 has driven net superannuation contributions negative for the first time. According to APRA, quarterly net superannuation contributions – super contributions less benefits paid – have gone negative for the “first time since compulsory superannuation was introduced”. For the June 2020… Read More »Net superannuation contributions go negative for first time
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… Read More »Government to extend COVID-19 early access to super deadline
ASIC has announced temporary relief from some of the financial advice rules, to improve the ability of consumers to get affordable and timely advice about early access to their superannuation. The Government expanded the early access to superannuation financial hardship rules as part of the COVID-19 response. This means more… Read More »Temporary relief from advice rules for early access to super
The SMSF Association has called for the rules around accessing superannuation early to pay for medical treatment to be “tighter and applied correctly”, in part so it can’t be used for elective surgery, while suggesting that some medical professionals may be over-promoting the option. The Association notes the “significant” increase… Read More »Early access to super rules should be “tighter and applied correctly”
Victims and survivors of family violence should be able to access their superannuation early. HESTA and Industry Super Australia have called on the Federal Government to make changes to the superannuation rules to allow family violence victims to access their super, as a last resort. HESTA CEO Debby Blakey said… Read More »Victims of family violence should have early access to super: HESTA
Applications for early release of superannuation on compassionate grounds can now be lodged online.
Read More »Early release of super application can now be lodged online
Accessing super early is allowed in some circumstances, with a number of conditions. However illegal super early access schemes can result in stiff fines or more severe penalties.
Generally in order to access superannuation generally a condition of release must be met. The conditions relevant for accessing super early include:
All the conditions of release can be found in Schedule 1 of the Superannuation Industry (Supervision) Regulations 1994 (SISR).
The Department of Human Services (DHS) has reported a continuing increase in applications for early release of superannuation.
The DHS received 19,286 applications for early release of super in 2013/14, up 7% from the previous year and 18.1% over 2009/10. These figures are contained in the DHS annual report for 2013/14.
However approved applications for early release of super are not growing at the same rate, with 11,728 approved in 2013/14, up 1.89% from the previous year.
Read More »More people applying to DHS for early release of super
Currently people who illegally access their superannuation balance early pay tax on the amount at their marginal tax rates, plus the medicare levy.
However it was a recommendation of the Cooper Review that this be tightened to further discourage illegal early access of super, with such amounts to be taxed at the top marginal tax rate:
“Recommendation 8.25
The Government should amend existing tax laws so that:
- (a) amounts illegally early released be taxed at the superannuation non‐complying tax rate; and
- (b) an additional penalty, based on a sliding scale of penalties that takes into account the individual circumstances, should apply.”
The Cooper Review panel came to this conclusion because the amount of tax payable on illegally early-accessed superannuation funds depends on the income of the individual, not the act of breaching the preservation rules and cashing restrictions. Such a person would still have the benefit of the remaining funds accessed early, though there are other penalties available, and so the panel thought that:
“Tax rates and penalties need to be amended to ensure there is both a greater deterrence factor and to ensure that those committing illegal early release do not enjoy the same treatment as those who legally get early release of their superannuation”.
Read More »Top marginal tax rate on early access to superannuation?
The Administrative Appeals Tribunal (AAT) has released another decision which shows that it does not pay to participate in superannuation early access schemes.
The decision of Vuong and Commissioner of Taxation [2014] AATA 402 (23 June 2014) following the ATO disallowed two objections by the taxpayer in relation to an early access scheme they participated in, including a significant ‘fee’ paid to the promoter.
Section 6.1 of the ITAA 1997 includes in Assessable Income amounts that are not Ordinary Income, called Statutory Income. Section 304.10, also of the ITAA 97, includes in Assessable Income the amount of a Superannuation Benefit if, among other things, the taxpayer receives a benefit from a complying superannuation fund where the benefit was received “otherwise than in accordance with payment standards prescribed under subsection 31(1) of the Superannuation Industry (Supervision) Act 1993″ unless the Commissioner “satisfied that it is unreasonable that it be included”. Section 307.15(2) of the ITAA 97 also provides that:
Read More »Early access to super: ‘fee’ included in assessable income
