We’re receiving many calls about the following article published by the ABC last week which relates to a potential superannuation withdrawal and re-contribution strategy: ABC News website.
We would like to clarify some points raised in the article for our clients.
The Government will allow individuals affected by COVID-19 to access up to $10,000 of their superannuation in the 2019-20 year, and a further $10,000 in 2020-21 (up to 24 September 2020).
Individuals will not need to pay tax on amounts released from super.
Through salary sacrifice, you can voluntarily re-contribute $10,000 of your pre-tax income into super before 30 June 2020, but must stay within the concessional contributions limits. Your voluntary contributions will be taxed at 15% in your superfund rather than at your marginal personal tax rate.
If you don't want to salary sacrifice, you can still make personal contributions of the $10,000 back to your superfund with after tax dollars and still get a personal tax deduction. Again, you must stay within the concessional contributions limits.
This is not straight-forward and careful consideration should be given to your individual circumstances. For example, if you become unemployed during the three month period then salary-sacrifice arrangements will no longer be an option.
Business Initiatives is here to support our clients through theses unprecedented times. Please contact us if you would like to discuss any of the recently announced government support measures.