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Over the past few months, we have spoken to several clients who accessed their superannuation early as part of the ATO’s Early Release of Super program. Because this action may indicate that the client is likely to experience hardship, banks didn't like it and some banks communicated to brokers that they definitely will NOT accept loan applications for such client.
However, we have seen that the financial impacts of the recent events on people can vary vastly. People and business in some industries lost their jobs and income completely while others were able to maintain their income. Banks are starting to realize this and today, despite the recent escalated situation in Victoria, we received formal communication from a major bank, which we deal with a lot, providing its guidelines around this matter. (Not sure if I can specify the name of the bank here because the communication was for brokers only so far and not yet public)
Below is the simplified summary of the key points from the bank. And we suspect that most banks will, soon enough, take a similar stance regarding this because we believe it is a reasonable approach where each individual's specific circumstances are considered.
𝗪𝗶𝗹𝗹 𝗜 𝗯𝗲 𝗮𝗯𝗹𝗲 𝘁𝗼 𝗮𝗽𝗽𝗹𝘆 𝗳𝗼𝗿 𝗮 𝗵𝗼𝗺𝗲 𝗹𝗼𝗮𝗻 𝗶𝗳 𝗜 𝗿𝗲𝗰𝗲𝗻𝘁𝗹𝘆 𝘄𝗶𝘁𝗵𝗱𝗿𝗲𝘄 𝗳𝗿𝗼𝗺 𝗺𝘆 𝘀𝘂𝗽𝗲𝗿?
- Yes! If you withdrew the funds with genuine intent, we can still apply as per usual with sufficient explanation for the bank's credit officer to take into consideration.
𝙏𝙝𝙚 𝙠𝙚𝙮 𝙝𝙚𝙧𝙚 𝙞𝙨 𝙩𝙤 𝙨𝙪𝙘𝙘𝙚𝙨𝙨𝙛𝙪𝙡𝙡𝙮 𝙙𝙚𝙢𝙤𝙣𝙨𝙩𝙧𝙖𝙩𝙚 𝙩𝙝𝙖𝙩:
1. You accessed your super due to Expected income reduction and/or Uncertainty of employment; AND 2. You subsequently maintained your income; AND 3. You are not currently in financial hardship or expected to be in financial hardship in the future.
e.g. - You were told their work hours would be cut and withdrew funds as a ‘safeguard’, but subsequently kept your normal work hours; - You felt uncertain about your business's performance and withdrew funds as a 'safeguard', but subsequently, your business's income were maintained or just slightly reduced.
𝗖𝗮𝗻 𝗜 𝘂𝘀𝗲 𝘁𝗵𝗲𝘀𝗲 𝗳𝘂𝗻𝗱𝘀 𝗮𝘀 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗹𝗼𝗮𝗻 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻?
- No! Early accessed super is not an acceptable form of genuine savings and equity, and if applicable, you will need to meet the current Savings and Equity requirements.
These funds may only be used as ‘funds to complete’ where the funds were accessed within the ATO eligibility guidelines.
𝙒𝙝𝙖𝙩 𝙩𝙝𝙞𝙨 𝙢𝙚𝙖𝙣𝙨, 𝙞𝙣 𝙨𝙝𝙤𝙧𝙩, 𝙞𝙨 𝙩𝙝𝙖𝙩 𝙞𝙛 𝙮𝙤𝙪 𝙗𝙤𝙧𝙧𝙤𝙬 𝙢𝙤𝙧𝙚 𝙩𝙝𝙖𝙣 90%, 𝙮𝙤𝙪 𝙈𝙐𝙎𝙏 𝙗𝙚 𝙖𝙗𝙡𝙚 𝙩𝙤 𝙙𝙚𝙢𝙤𝙣𝙨𝙩𝙧𝙖𝙩𝙚 𝙜𝙚𝙣𝙪𝙞𝙣𝙚 𝙨𝙖𝙫𝙞𝙣𝙜𝙨 𝙤𝙛 5% 𝙬𝙞𝙩𝙝𝙤𝙪𝙩 𝙧𝙚𝙡𝙞𝙖𝙣𝙘𝙚 𝙤𝙣 𝙩𝙝𝙚 𝙚𝙖𝙧𝙡𝙮 𝙖𝙘𝙘𝙚𝙨𝙨𝙚𝙙 𝙨𝙪𝙥𝙚𝙧?
𝗧𝗵𝗲 𝗯𝗮𝗻𝗸 𝗮𝗹𝘀𝗼 𝘀𝗽𝗲𝗰𝗶𝗳𝘆 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲𝘆 𝗱𝗼𝗻'𝘁 𝘄𝗮𝗻𝘁 𝘁𝗼 𝘀𝗲𝗲.
Applications should not be submitted for customers who accessed the funds outside the ATO’s eligibility guidelines and were not going to be financially impacted at the time.
Please get in touch with us if you have any question.
Kind regards,
𝐾𝑖𝑒𝑛 𝑃ℎ𝑎𝑛 & 𝑃ℎ𝑢𝑜𝑛𝑔 𝑁𝑔𝑢𝑦𝑒𝑛.
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