How to take advantage of coronavirus tax loophole that could save you $5,000 over just six months

How to take advantage of the ‘coronavirus clause’ that could save you $5,000 in just six months

  • Australian National University researchers examined coronavirus super policy
  • COVID-19 hit taxpayers allowed to withdraw $10,000 a year from their super
  • They are allowed to make voluntary contributions and pay just 15 per cent tax 
  • Robert Breunig, Tristram Sainsbury said this could save $5,000 over six months
  • Coronavirus symptoms: what are they and should you see a doctor?

Australians are being urged to take advantage of a coronavirus clause that allows them to save $5,000 in tax over six months.

Treasurer Josh Frydenberg has announced taxpayers would be allowed to withdraw up to $10,000 from their superannuation, tax free, by the end of June plus another $10,000 by the end of September.

Australians affected by COVID-19 are being allowed to access their super instead of being forced to wait until they retire in their late fifties or sixties.

Australians are being urged to take advantage of a coronavirus clause that allows them to save $5,000 in tax over six months. Pictured is a Centrelink queue at Flemington in Melbourne’s inner west

Under the new coronavirus rules, individuals can also make voluntary super contributions and only pay 15 per cent tax instead of the much higher marginal personal income tax rate of 32.5 per cent for income earned between $37,001 and $90,000.  

Australian National University Crawford School of Public Policy researchers Robert Breunig, a professor of economics, and Tristram Sainsbury, a research fellow, said this rule could potentially save someone $5,000 in tax over six months. 

The experts from ANU’s Tax and Transfer Policy Institute said this would most likely require some help from an accountant to structure their salary sacrificing arrangements 

‘You can do it mostly risk-free,’ they said in a piece for The Conversation website.

‘But you do have to rearrange your financial affairs a bit, and deal with some bureaucratic hurdles.’

As part of a second stimulus package, worth $66.1billion, the government announced a series of superannuation measures to help individual facing financial stress as a result of coronavirus.

When can you access your superannuation?

For those born before July 1, 1960, it’s 55

The rises to 56 for baby boomers born between July 1, 1960 and June 30, 1961

It’s 57 for those born between July 1, 1961 and June 30, 1962

It’s 58 for those born between July 1, 1962 and June 30, 1963

It’s 59 for those born between July 1, 1963 and June 30, 1964

It’s 60 for anyone born after July 1, 1964

Source: moneysmart.gov.au

Under the coronavirus rules, individuals can also make voluntary super contributions and only pay 15 per cent tax instead of the much higher marginal personal income tax rate of 32.5 per cent for income earned between $37,001 and $90,000. Pictured is Westfield at Parramatta in Sydney's west with fewer customers than usual

Under the coronavirus rules, individuals can also make voluntary super contributions and only pay 15 per cent tax instead of the much higher marginal personal income tax rate of 32.5 per cent for income earned between $37,001 and $90,000. Pictured is Westfield at Parramatta in Sydney’s west with fewer customers than usual

They can access $10,000 from their super savings by June 30 and another $10,000 from July 1 for another three months, without this affecting their Centrelink or Veterans Affairs entitlements.

CORONAVIRUS CASES IN AUSTRALIA: 5,108

New South Wales: 2,298

Victoria: 1036

Queensland: 835

Western Australia: 392 

South Australia: 367  

Australian Capital Territory: 87

Tasmania: 72

Northern Territory: 21

TOTAL CASES:  5,108

RECOVERED: 508

DEAD: 23

Australia’s superannuation savings were worth $3trillion at the end of 2019, before Chinese authorities confirmed the first cases of coronavirus in Wuhan. 

Employer contributions to super have been compulsory since 1992.

The savings of Australian workers are now at risk, with the federal government last month closing down clubs, pubs, cinemas and gyms in a bid to slow the spread of coronavirus.

Deloitte Access Economics partner Chris Richardson, an economist, estimates one million jobs were lost last week.

In February, before COVID-19 cases escalated in Australia, there were 699,100 people without a job. 

Westpac chief economist Bill Evans is expecting Australia’s jobless rate to triple from 5.1 per cent to 17 per cent by the end of June.

This would be the highest level of unemployment since 1932 at the height of the Great Depression. 

Read more at DailyMail.co.uk