Second payment – from 1 July 2020
If your clients have been impacted by coronavirus (COVID-19), they may be eligible for a second Temporary Early Release of Superannuation, a measure recently announced by the Federal Government.
Your clients may be eligible to receive a second payment from 1 July 2020 and may want to make an application to the ATO for this payment in early July.
So that your clients can be paid the early release funds as soon as possible, we encourage you to review your clients’ holdings now and place any required sales before 30 June to ensure they have enough cash for the second payment.
Why is this important?
Every year there are many unit pricing delays in the first half of July, as fund managers reconcile their unit prices following their end of financial year distribution processing. This means the proceeds from sell orders may take longer to clear through to your clients’ accounts when placed in July.
Please be aware that if your client doesn’t have enough cash available to fund the withdrawal, we’ll:
- initiate asset selldowns without seeking further instructions from you or your client
- sell assets down based on information provided in the relevant Product Disclosure Statement (PDS)
- process the selldown within five business days after receiving the withdrawal request from the ATO (if we need to sell assets on your client’s behalf).
If we need to initiate asset selldowns, receiving the proceeds from these payments will take longer than normal because of the expected unit price delays in the first half of July. Asset selldowns in July can often take at least two weeks longer than normal.
Please also consider any pending insurance premiums when evaluating your client’s available cash balance.
What if my client doesn’t have enough money to fund the full withdrawal?
If your client’s balance is insufficient for the full payment, we’ll:
- use the available balance to make a partial payment
- draw the account balance to zero
- keep the account open.
If we’re unable to complete the payment request either in part or in full, your client won’t be able to make a further claim to the ATO for the unpaid amount
If you have any questions about the early access of superannuation process, please call us.