Accessing your super during COVID-19 became a live option for millions of Australians when the federal government introduced an early release scheme in April 2020. Under the scheme, eligible individuals could withdraw up to $10,000 in the 2019-2020 financial year and a further $10,000 in the 2020-2021 financial year. That's a combined maximum of $20,000 taken out before the usual preservation age. The applications closed in December 2020, so the window has long since shut. But the effects on people's balances and long-term savings are still playing out today.
How the COVID-19 super early release scheme worked
The Australian Tax Office (ATO) managed applications through myGov. There was no tax payable on amounts withdrawn under the scheme, and the payments did not affect Centrelink entitlements or child support assessments at the time. The government set eligibility criteria that applied to both employees and self-employed Australians.
To qualify, you needed to meet at least one of the following conditions:
- You were unemployed.
- You were eligible for JobSeeker, Youth Allowance, Parenting Payment, Farm Household Allowance, or Special Benefit.
- On or after 1 January 2020, you were made redundant, your working hours were reduced by 20% or more, or, if you were a sole trader, your business was suspended or your turnover fell by 20% or more.
The application process itself was straightforward. You applied through the ATO via myGov, nominated how much you wanted (up to the $10,000 cap per year), and the ATO contacted your fund directly. Most funds processed payments within five business days.
Who actually used the scheme
The numbers were large. By the time the scheme closed, around 3.5 million Australians had made at least one withdrawal, and the total paid out exceeded $36 billion. Younger workers and those in lower-paid industries withdrew at higher rates, including people working in hospitality, retail, and the arts. Self-employed Australians, sole traders, and contractors were also well-represented, given how sharply their incomes fell in 2020.
If you're a sole trader or run a small business and you withdrew from your super, you're not alone. Many small business owners used the scheme as a cash-flow bridge when client work dried up overnight. Understanding the longer-term cost is the most useful thing you can do now.
The long-term cost of withdrawing early
Superannuation compounds over decades. Taking $20,000 out at age 30 doesn't just reduce your balance by $20,000. It removes those funds from compounding growth for 30 or more years. A rough estimate using a 7% annual return shows that $20,000 withdrawn at 30 could have grown to roughly $152,000 by age 65. The actual figure depends on your fund's performance, fees, and your contribution history. But the direction is clear: early withdrawal has a cost that isn't visible on the day you make it.
This doesn't mean the decision was wrong. For someone who couldn't pay rent or cover business costs in May 2020, accessing $10,000 was the right call. The point is simply to understand the gap and make a plan to address it, whether through additional voluntary contributions, salary sacrifice, or other savings strategies.
What to do now if you withdrew
The scheme is closed, but your options aren't. The ATO still allows individuals to make voluntary after-tax contributions (non-concessional contributions) up to $110,000 per year as of 2026, subject to your total superannuation balance. If your balance is below $500,000, you may also be able to carry forward unused concessional contribution caps from previous years and make larger pre-tax contributions in a single year.
Talking to a licensed financial adviser is the most reliable way to map out a catch-up strategy that fits your specific situation. A small business owner has different income patterns and tax considerations than a PAYG employee, so generic advice only goes so far.
For those who are running a small business and watching cash flow closely, it's also worth revisiting your overall financial structure. Super contributions often fall away when cash is tight, and COVID-19 made that worse for a lot of people. Building a sustainable habit of even small contributions now makes a bigger difference than waiting for conditions to feel more comfortable.
Tax treatment of COVID-19 super withdrawals
Withdrawals made under the early release scheme were tax-free. They were not included in assessable income for the relevant financial years. This was a deliberate policy choice to avoid penalising people who were already financially stressed. If you're unsure how a withdrawal was reported or whether it affects anything today, your accountant or the ATO's online services can confirm the position. For practical small business accounting support, basic accounting hygiene for Australian business owners is a useful starting point.
If you're a sole trader thinking about super now
Sole traders don't have an employer paying super on their behalf. Super contributions are entirely optional and self-funded, which means they're also the first thing that stops when income drops. COVID-19 reinforced how exposed that position can be.
The ASIC MoneySmart website has a super calculator that lets you model different contribution scenarios and see what they mean for your projected balance at retirement. It's free and doesn't require you to sign up for anything. Running the numbers is a useful exercise even if you're not ready to change anything yet.
The COVID-19 super scheme served a real purpose when it mattered. The task now is accounting for what it cost your future balance and deciding, with clear eyes, what to do about it.