Have you been hit hard financially by the economic impacts of COVID-19? You may be considering joining the millions of Australians who have dipped into their super to get them through this rough time.
The latest figures from the Australian Taxation Office (ATO) released to RateCity show that 2.57 million unique applications for early super release have been approved, totalling $30.2 billion.
This equates to an average amount of $11,750 being withdrawn per person.
The government initially capped the total that could be withdrawn at $10,000 but has allowed for repeat requests as of this new financial year.
If you’re looking to dip into your super for financial support, the ATO's Assistant Commissioner Sonia Corsini has some handy tips that you may want to know before you begin your application.
Top tips from the ATO for early super withdrawal
1. Are you eligible for early super withdrawal?
It's clearly important to make sure you can withdraw your super, and if you're looking to this approach, it might be time to get some reading done and dusted.
"The eligibility criteria is outlined on our website," said Ms Corsini. It’s really important that you carefully read the criteria and only apply if you meet it. If you’re not sure, ask your tax professional or financial advisor for advice about eligibility and whether accessing your super is the right decision for you. If you’re a temporary resident, you are not eligible to apply from 1 July 2020."
2. Is your record keeping in order?
You may not think those records matter, but financial details could be everything when it comes to having the ATO approve your application.
"We don’t ask you to include supporting evidence when you submit your application, but you should keep good records to support your application. For example, payslips or bank statements or letters of dismissal from your employer," said Ms Corsini.
"We might ask you to explain how you assessed your eligibility and provide evidence to us. If you are unable to demonstrate your eligibility, we may revoke the determination that we issued in respect to your application. That means that any money you withdrew from super will be taxable and you’ll need to include it in your tax return. In addition to this, we may apply financial penalties for the most serious cases.
"If you think you may have done the wrong thing, it is much better to come forward to make a voluntary disclosure than to wait to be audited. If in doubt on how to proceed, we recommend seeking the advice of a tax professional. We know people make mistakes so we will work with you to help to remedy your position" said Ms Corsini.
3. Have you linked to ATO on myGov?
"You’ll need to be linked to the ATO on myGov in order to apply. If you aren’t already linked to the ATO on myGov, follow the instructions at ato.gov.au/MyGovLinking," she said.
These days, everything is to an online presence, and there's no exception here. Make sure your myGov is connected to the ATO, otherwise you might be in for a hard time.
4. Take your time and please be patient
Even if you've decided that yes, you'll be getting money out from super, Ms Corsini advises taking your time to ensure all the details are right.
"Take your time with your application, and don’t rush! Mistakes can slow your application and payment down unnecessarily. Double check details like your bank account details and make sure they are correct before submitting," she said.
"And once you have lodged your application, please be patient. It’s a busy time but we are working as hard as we can to process applications quickly and we know the funds are processing payments as quickly as they can" said Ms Corsini.
5. Watch out for scammers!
And finally, while you're being careful about details, make sure to be cautious about anyone asking to go through the work for you. Scammers are about and will happily take your money if you let them, and we doubt you'd want that to happen.
"Applying for early access to your superannuation under the COVID19 scheme is a free service. You do not need to pay someone to do it for you. If you receive a text message or e-mail stating that your myGov details have been changed, or that you have applied for early release of super and you have not, don’t ignore these messages: check your myGov, call the ATO and your super fund to make sure your identity has not been compromised."
"But don’t click on any links – one technique used by scammers to steal your information is to mock-up messages which appear to be from the ATO. To see how to identity and report a suspected scam, head to ato.gov.au/scams" said Ms Corsini.
- Keep in mind that superannuation is there to support you in retirement. Raiding your nest egg may make a serious dent in your final balance - a $20k dent if you're not careful.