Access to $10,000 Superannuation in Virus Hardship Cases

I'm employed full-time on PAYG and have a side business (registered ABN). However, I have temporarily ceased the side business due to COVID-19. My full-time employment has not been affected.

Does anyone know if I would still able to access the $10,000 early release of super on the basis that I'm affected as a sole trader?

Initially I had no intentions of withdrawing super. But now that the share market has rebounded I would consider it to park it in my offset account.

Thanks.

 

Hi all,
I have several friends that work full time, have not been financially affected by Covid 19 and have successfully applied for and received the $10k from the Early access scheme. Can anyone tell me what the fine would be for accessing this money when not eligible? You would think if you apply and get it then that’s that- if you apply and don’t get it due to not being eligible than so be it but would the Gov give you the 10k and then means test it later to hand out fines or some sort of punishment? Personally I would like to access it to do more renovations however I don’t want to audited or fined down the track? Thoughts anyone?
cheers..Paul

 

I did see the schedule of penalties. Jail, penalties, assessmnet of the amount withdrawn, false representations regime, ..... depends on the level of culpability. A false declaration will be the easiest way to be caught and be liable. Hard to argue its a error when you signed a declarion that says you were unemployed or retrenched and you were not.

The ATO have already indicated they are planning data matching those who arent unemployed or getting jobkeeper and matching that to single touch payroll data which they get every pay period. Its a no brainer for the ATO to send "please explain" letters which explain that they will amend the return within 28 days and impose even basic penalties....200% of the tax benefit as a start.

 

There are four broad work tests and you may meet the sole trader one. The other three are employment related.Depends upon the timing of when you ceased business eg AFTER 1 January etc.

To apply for early release, you must 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.

​

 

The last time I operated the business was in December 2019. I had operated it continuously for several years.

I was intending on resuming my activities in January 2020, but because I have many Chinese clients, I decided not to resume my activities then as COVID-19 was rampant in China at the time. So I stopped probably a few months before it really hit Australia. But I will resume the business in the coming months.

 

Seemingly may be eligible. You dont indicate if the business activity was as a sole trader, company etc. There also may / could be jobkeeper eligibility as a eligible busienss participant to consider

 

I operate a small business within a trust and corporate trustee, I receive income via trust distributions rather than a wage. Turnover is way down, initially due to child care, but now I seem to have lost my foothold and still way down. Can't seem to work out if eligible, as no mention of entities operating in a trust like there was for Jobkeeper.

 

Have you had advice about the asset protection aspects of this? Under remuneration.

 

To apply for early release, you must satisfy one or more of the following requirements:

• You are unemployed. (not employed = No)
• 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 (no)
  • your working hours were reduced by 20% or more (If its a disc trust then you may not be working but receiving a share of income)
  • if you were a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more. (N/A)

I dont see where you satisfy a test of eligibility. The working hours test isnt going to be met unless you are a employee that is gainfully employed (ie working hours). Many people are regretting their structure and form of remuneration when they probably had discussions concerning this and preferred that tax didnt need to be withheld (cashflow boost) and super was not mandatory. I will also note that you may have no workers comp cover. So dont slip and hurt yourself.

Jobkeeper as a eligible busineess participant may be one limited avenue. If you had used a company structure you may well have accessed cashflow boost, jobkeeper and early access to super.

 

Nope.....

 

A workmate accessed $10k as his workdays (and pay) reduced 23% per month, he's hoping it continues into next FY also as he's already taken $10K out of super to reduce his mortgage and hopes to do another $10k next FY into the mortgage, not that's he''s anti-super, he's been contributing an extra $300 per month for years now to Super; from his POV it's an opportunity to reduce personal debt

The Company offered the opportunity to keep your monthly pay the same if you had excess annual leave, you'd just need to cash out 4 days annual leave per month (providing you had surplus and maintained a min of 4 weeks AL)

 

Ok fair enough, I guess it's not mentioned on the eligibility test for a reason.
Yes, I pay workers comp each year, it is assessed on wages (obviously) and any trust distributions in lieu wages.

 

Thanks for your reply. Yes I am a sole trader.

 

I noticed when applying on the ATO website, the wording for sole trader is interesting. It states "Sole Trader only". Thoughts?


Unemployed
Eligible for Government benefit - JobSeeker Payment or Parenting Payment or Special Benefit
Eligible for Government benefit - Youth Allowance
Eligible for Government benefit - Farm Household Allowance
Been made redundant on or after 1 January 2020
On or after 1 January 2020 you had a reduction in your working hours by at least 20% (including to zero)
Sole Trader only – On or after 1 January 2020 you had a reduction in turnover (by at least 20%)
Sole Trader only – On or after 1 January 2020 your business was suspended

 

Sole traders can't employ themselves. If you operated a trust with a corporate trustee or a company the company could employ you. You would then have working hours..

 

Ah okay, I was worried it was referring to "sole trader only" in the sense that the sole trader doesn't have full-time work elsewhere. Ie ruling me out because I have a full-time PAYG job and a side business as a sole trader.

 

I haven't read the legislation but from that it seems if any one of those conditions apply you would qualification

 

I'm thinking @Sheldrick may be eligible as your business was suspended due to most clients somehow being Chinese and Chinese people were not coming into the country. Can you reword your reason for suspension to fit the eligibility criteria? Were you unable to access stock? Were your potential clients in lockdown?

 

ATO investigating early super release tax avoidance

Australians who have drawn down on their superannuation under the government’s early access scheme despite not suffering reduced hours of work or wages, or who are using the hardship scheme as a tax dodge, are under investigation by the Australian Taxation Office for possible breaches of anti-avoidance laws.

The ATO said it was investigating cases where workers had drawn down on savings under the program when they had not suffered a change to their regular salary, had misled the Tax Office when applying for the money, and who had accessed a tax deduction by contributing money to super before withdrawing it.

 

I'm pretty sure I'm eligible. When COVID-19 became quite bad in Australia, the business had to suspend to comply with the restrictions. The normal activities of the business requires lots of clients together in an enclosed space.