Coronavirus early access to super

Many Australians were able to access up to $20,000 from their super in 2020, but this scheme has now ended. Here are some of the implications for you if you did withdraw from your super, as well as some other ways you may be able to access the money if you're in need.

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The initiative introduced by the government in 2020 which allowed Australians who lost income due to covid-19 to access money from their super has now ended. Last year, if you'd lost work or been made redundant due to coronavirus you may have been eligible to access up to $20,000 from your super tax free. The cut off date to access from your super under this scheme was 30 December 2020.

Outside of this scheme, there are a few reasons why you may be able to access your super early, including if you're in severe financial hardship.

How did the Covid early access to super scheme work?

The scheme has now ended and you're not able to access any more of your super under this initiative. However, here's how it worked.

Eligibility

This initiative was intended for Australians who are were already unemployed and struggling to find work, or had lost a job or income as a direct result of the coronavirus pandemic. Citizens and permanent resident of Australia and New Zealand needed to meet at least one of the following eligibility criteria to access their super early as part of this scheme:

  • You're unemployed
  • You're eligible to get a job seeker benefit, youth allowance for jobseekers, parenting payment or farm household allowance
  • You've been made redundant or had your working hours reduced by 20% or more since 1 January 2020
  • You're a sole trader and you've had to pause your business operations, or your turnover has fallen by 20% or more, since 1 January 2020

Temporary residents who couldn't meet immediate living expenses also needed to meet at least one of the following eligibility criteria to access their super early:

  • You're on a student visa that you've held for more than 12 months
  • You're on a temporary skilled work visa and still employed
  • You're on a temporary resident visa

How much of your super can you access?

The package allowed you to access up to $20,000 from your super before 30 December 2020. This was the maximum amount eligible people were able to withdraw, however you could have chosen to only withdraw some of this.

Did you withdraw money from your super in 2020? Here's what you need to know.

If you chose to withdraw money from your super in 2020, here are the positives and negatives of that move.

Positives of withdrawing from your super

  • If you've been in severe financial hardship, accessing a small part of your super may have helped you stay on top of your bills and repayments over the past 6-12 months
  • Withdrawing your super is tax free.
  • If you didn't end up needing the money you can add it back into your super via a voluntary contribution.

Downsides of withdrawing from your super

  • Your superannuation is there to help fund your retirement and by accessing some of it now, you've taken that money (and more) away from your future self. The money in your super benefits from compounded investment returns over the long term. That $10,000 today could be worth several times that by the time you retire. If you're in your 20s, it could be worth more than $100,000 by retirement.
  • Super funds were down in 2020 because of the huge losses we saw in the stock market. However, these losses are only realised when you sell. If you made a withdrawal, you would have locked in that loss of capital.
  • If you took money out of your super in 2020, you would have missed out on the market rebound that we've seen in 2021.

Does accessing my super affect my credit score or future borrowing power?

The money you withdrew from your super isn't a form of credit, so it won't be included in any official credit report. If you apply for a home loan in the near future, the lender may potentially be able to see that you've accessed the money from your super if they look at your transaction history. However, it's highly unlikely that lenders will look poorly on anyone who accessed their super early to pay for essential bills and expenses. So it won't impact your borrowing capacity.

"It is highly unlikely that withdrawing money out of superannuation will impact future loan applications. The banks are well aware of the financial impact during COVID-19 and will make exceptions for temporary solutions that had to be put in place by customers during this difficult time," said mortgage broker Marissa Schulze.

What are the tax implications?

You won't need to pay any tax on the money you withdrew from your super in 2020, as it's already been taxed at the concessional tax rate of 15%. Therefore you don't need to include this money in your taxable income when you lodge your tax return this year.

However, if you deposit the money into a savings account that you then earn interest on, you will be required to pay tax on the interest earned. And if you choose to add it back into your super via a voluntary contribution, it will be subject to contributions tax.

Can you recover your super after making a withdrawal?

You can make small, regular contributions back into your super when you're able to do so. QSuper's chief of member experience Jason Murray says the amount you contribute depends on your age and how quickly you want to recover the money you took out.

"Our modelling shows that if you're under 40 years of age, it is possible to recover a $10,000 withdrawal, including the lost investment earnings, by making after-tax contributions of $10 to $15 a week until retirement. Obviously, the sooner you plan to retire, the bigger the weekly amount to make up the difference. At 50 years old, for example, it's around $20 per week," he said.

If you want to recover the money you took out of your super, the sooner you start making extra contributions the better. According to QSuper, if you withdrew $10,000 and you want to recover this in your super balance within five years, you'll need to contribute $45 a week in addition to what your employer pays you. If you want to recover the money in 10 years, you'll need to make weekly contributions of $26.

Another way to help your super balance recover is by making sure you've just got the one super fund in your name (here's how to consolidate your super), as this will reduce your fees. You should also compare super funds to make sure yours is earning string returns and charging low fees. If you're interested in finding a new fund, you can see some of our best super fund picks to help get you started.

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65 Responses

    Default Gravatar
    KenOctober 7, 2020

    Hi, I have about a $140,000 in super. I’m 55 and know I will never work again. Is it possible to have my super released earlier than 60? My wife is on approx. 100k a year. Regards.

      Avatarfinder Customer Care
      TeyOctober 8, 2020Staff

      Hi Ken,

      Thank you for reaching out to Finder. Hope you are doing well.

      In general, you can withdraw your super when you turn 65 (even if you haven’t retired), when you reach preservation age and retire, or under the transition to retirement rules, while continuing to work. 

      There are very limited circumstances where you can access your super early. These circumstances are mainly related to specific medical conditions, severe financial hardship, COVID-19, or the First home super saver scheme.

      To get your super released early you must meet 1 of these eligibility requirements:
      >be in severe financial hardship
      >have a terminal illness
      >be a temporary resident
      >have less than $200 in your super fund
      >meet compassionate grounds

      To apply for early super due to COVID-19, you must satisfy one or more of the following requirements:
      >you are unemployed
      >you are eligible to receive one of the following:
      -JobSeeker payment
      -Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice)
      -Parenting payment (which includes the single and partnered payments)
      -Special Benefit
      -Farm Household Allowance
      >on or after 1 January 2020 either:
      -you were made redundant
      -your working hours were reduced by 20% or more (including to zero)
      -you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

      If you’re eligible and want to access COVID-19 early release of super in the 2020–21 financial year, you can submit an application between 1 July 2020 and 31 December 2020 – even if you have applied in 2019–20 financial year.

      If you are eligible for this new ground of early release, you can apply directly to the ATO through the myGov website. You will need to certify that you meet the eligibility criteria relevant to your circumstances. Please note that accessing your super early will affect your super balance and may affect your future retirement income. Consider whether you need to seek financial advice before starting your application.

      I hope this helps you. Feel free to contact us back for further inquiries you may have and we’ll be glad to help you.

      Cheers,
      Tey

    Default Gravatar
    BenJuly 1, 2020

    Question, I started up a partime business and also have a full time job. I have an ABN and bought stock, ect and started to operate but closed down/suspended the business due to Covid. but I am working on a full time basis in my day job. Am i classified as a sole trader that lost 20% income (as i don;t receive any income in my business)

      Avatarfinder Customer Care
      FayeJuly 2, 2020Staff

      Hi Ben,

      Thanks for reaching out to Finder.

      Sorry to hear that your business has to closed down due to COVID-19. Kindly refer to the eligibility criteria listed above. If you satisfy one of the circumstances outlined in the criteria you will be eligible for the early release of super.

      If you are eligible, you can can submit an application between 1 July 2020 and 24 September 2020 through ATO online services in myGov.

      I hope this helps.

      Keep safe!
      Faye

    Default Gravatar
    AndrewJune 27, 2020

    My hours have been cut by 40% but I’ve been using annual leave to top up my wage can i still access my super through covid19 crisis ?

      Avatarfinder Customer Care
      JackieJune 29, 2020Staff

      Hi Andrew,

      Thanks for your inquiry.I hope all is well for you.

      Generally, if you are an Australian citizen, you can apply for the early release of superannuation due to COVID-19 provided you satisfy one or more of the following requirements:

      • You are unemployed.
      • 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.
      • On or after 1 January 2020, either
      – you were made redundant
      – your working hours were reduced by 20% or more
      – if you were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

      As a reminder, super is designed to help you save for retirement. Please consider all your options and check if there are other financial assistance that may be available to you before you apply for COVID-19 early release of super.

      Hope this helps.

      Regards,
      Jackie

    Default Gravatar
    LornaJune 15, 2020

    Can you help me how to apply early release from my super. Though I am still working I am still behind my bills.Is there any possibility for me to apply early release
    from my super?

      Avatarfinder Customer Care
      JoyceJune 16, 2020Staff

      Hi Lorna,

      I hope this email finds you well. I understand you would like to know how to apply for an early release of your super.

      Early release of super is an initiative to help people who are financially affected by COVID-19. You can apply for early release of super provided you are an Australian or New Zealand citizen or a permanent resident and you satisfy one or more of the following requirements:

      -You are unemployed
      -You are eligible to get a job seeker benefit, youth allowance for jobseekers, parenting payment or farm household allowance
      -You have been made redundant or had your working hours reduced by 20% or more since 1 January 2020
      -You are a sole trader and you had to pause your business operations, or your turnover has fallen by 20% or more, since 1 January 2020

      As a reminder, super is designed to help you save for retirement. Before you apply to access your super, please consider all your options and check if there are other financial assistance that may be available to you.

      I hope this helps.

      Cheers,

      Joyce

    Default Gravatar
    PatiJune 10, 2020

    Hi! Some of my friends claim part of the $10,000 of super but they are still working 40 hours and overtime. Is this possible?

      Avatarfinder Customer Care
      MaiJune 11, 2020Staff

      Hi Pati,

      Thank you for reaching out to Finder.

      Please note that only one of the below needs to be meet to be eligible to receive super early.

      * You’re unemployed
      * You’re eligible to get a job seeker benefit, youth allowance for jobseekers, parenting payment or farm household allowance
      * You’ve been made redundant or had your working hours reduced by 20% or more since 1 January 2020
      * You’re a sole trader and you’ve had to pause your business operations, or your turnover has fallen by 20% or more, since 1 January 2020

      If your friends are able to receive their super early despite not having reduced working hours and still working overtime, possible that they were able to meet other eligibility.

      See this ATO page about early access to super for more details.

      Hope this helps and stay safe.

      Kind Regards,
      ​Mai

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