Under a suite of changes to super law following the COVID-19 pandemic, people can now access up to $10,000 from their super accounts for COVID-19 relief purposes. Individuals who have nil conditions of release already have full access to their super and therefore cannot and do not need to benefit from the COVID-19 early access scheme. However, it gets a bit trickier if an individual is receiving a Transition to Retirement Income Stream (TRIS) and wants to access additional super from their TRIS under the scheme. This article will explain how the scheme works in relation to a TRIS.Melissa Ramov, Maddocks Lawyers
Under the COVID-19 early access scheme, people can access their super accounts if they are adversely affected by COVID-19. Release of up to $10,000 is permitted for each FY in the FY20 and FY21.
If an individual meets a condition of release (such as reaching age 65), then they will typically already have full access to their super. These people do not need to access the COVID-19 early access scheme.
If a person does not meet a condition of release then they ordinarily won't be able to gain early access to their super unless it is a ground that is permitted under super law e.g. on compassionate grounds or more recently, under the above COVID-19 early access scheme.
Many people access their super by being paid a TRIS, which can be accessed when an individual has reached their preservation age but is still working. A TRIS does not allow unrestricted access to super, however it allows the individual to access up to 10% of the account balance of their super each year.
In order to gain access to the COVID-19 early access scheme, a number of conditions must be met which are helpfully set out on the ATO's website here .
If a person is receiving a TRIS, then they are unable to request release of further funds from their TRIS under the COVID-19 early access scheme. The maximum amount of funds that can be released from a TRIS is capped at 10% as stated above. The legislation introduced as part of the COVID-19 early access scheme does not change this.
Therefore, in order to be able to access funds which are supporting a TRIS, the amount of the TRIS must first be commuted back into the accumulation phase within the member's super fund in accordance with the rules of the super fund and the pension. The Cleardocs SMSF Pension Commutation product can be used to commute an SMSF's TRIS back into the accumulation phase. Before a TRIS is fully commuted back into the accumulation phase, the trustee must ensure that a proportion of the minimum annual pension payment amount is paid from the TRIS in that year. After the TRIS has been commuted, the member can apply to have these funds released under the COVID-19 early access scheme (provided the member meets the conditions for accessing the scheme in the first place). The person can then recommence a new TRIS.
Alternatively, the person could effect a partial commutation of their TRIS back into the accumulation phase, in the sum of $10,000, and that $10,000 could then be released from the person's accumulation account under the COVID-19 early access scheme. However, prior to effecting the partial commutation in accordance with the rules of the super fund and the pension, the trustee must ensure that the amount which remains in the TRIS is at least the proportion of the minimum annual pension payment amount which must be paid in that financial year.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
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Melissa is a lawyer in the Maddocks Commercial team.
Melissa has been involved in acting for a range of commercial and professional industry clients.
Melissa advises extensively in the following areas:
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For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.