If the last 6 months have taught us anything, it’s that we are resilient, resourceful and capable of far more than we give ourselves credit. We’ve witnessed adaptation and creativity from our clients and the local community that has saved businesses and the livelihoods of many people. Although we have done well thus far, we are not out of the woods and a large number have suffered as a result of the pandemic.

Many have been pushed to brink financially and have been left with no option other than to dip into their superannuation. On April 20, the Australian Government introduced temporary early access to superannuation for individuals who meet the eligibility criteria, to withdraw up to $20,000 in total from your superannuation account. As at 30 August, a total of $32.6bn had been withdrawn from superannuation to assist Australians in meeting their financial obligations. While this number may seem high, the potential long-term implications are the real concern. The table below outlines the potential impact a $20,000 withdrawal could have on our retirement balances.

https://www.canstar.com.au/superannuation/risks-access-super-early/

While the numbers above may be confronting, it’s not all doom and gloom. There are a number of options to contribute funds back into your superannuation account to limit the damage. When we return to a ‘new normal’ there may be opportunities to utilise improved cashflow to make contributions to superannuation. Many contributions are tax deductible or provide co-contribution allowances that can assist in rebuilding your superannuation balance.

It is important to note that a Bill was put before the government at the start of September that could limit the tax deductions available for contributions made by those who accessed funds in the Covid release. Essentially what this means is that if you withdraw $10,000 from your superannuation balance you will be ineligible for a tax deduction on the first $10,000 you contribute personally to your fund.

Because there are strict guidelines and limitations imposed on superannuation contributions, you should seek financial advice before making additional contributions to superannuation. We are happy to discuss this with you or answer any other questions you may have.