Sole Traders who have been affected by the COVID-19 crisis and have seen more then a 20% drop in their income can apply for early release of their superannuation. They can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. This will be available mid-April 2020.

But the question remains, is it a good idea for Sole Traders to access their superannuation?

We spoke to 5 experts to get their thoughts. 

Davie Mach, Founder of Box Advisory Services.

We're a Chartered Accounting firm that specifically helps small businesses and contractors in Australia.

From a tax perspective, drawing your superannuation could be a good opportunity to take advantage of some tax concessions offered by the government. Drawing your superannuation are tax-free, which means the income you're taking has no tax liability. When times become better, you can put that money back and receive a tax deduction for it. However, I stress that this is based on individual financial circumstances and should be assessed on its own merits. If you are someone who has the luxury to do so, then this could be a good potential option to save on some tax.

We've also collated a COVID-19 resources page that specifically compiles all of the information that small business owners need to find out more about the superannuation scheme as well as all other stimulus package support.

Olivia Long, Managing Director SMSF for Prime Financial Group

If you need the money, my advice is take it! All Australians can submit an application via MyGov from mid-April.

Another measure sole traders should be aware of surrounds Self Managed Super Funds and Business Real Property. The ATO has announced if you are leasing property to a related party (your business), they will not take action where an SMSF gives a tenant a temporary rent reduction during this period. Another smart move by the ATO.

Chris Carlin - Master Your Money Now.

I have a very strong view that accessing your super is the last thing you should be doing. If a 25 year old was to access $10,000 from their high growth super fund now, they will would be out of pocket approximately $200,000 at age 65.

Dr Adrian Raftery - Principal of Mr Taxman

It is imperative that you talk with a financial adviser before you do anything. My preference is - that unless its absolutely imperative that you have to - not to access your superannuation.

With stockmarkets failing substantially, your superannuation is probably already depressed - for example if it was $30k a few months ago lets just say it might be worth $22k now. By withdrawing 2 x $10,000 you will be left with just $2k and next to no hope of recovering the $8k lost. What we have found is that markets invariably go up after corrections … and we expect a substantial sharp rise again in the stockmarket when the a) case rate for COVID-19 slows down and b) the recovery rate starts rapidly increasing.

However it could be a good strategy for certain people who meet the conditions for the early release of super - but don't need the funds to cover living costs - to actually make the withdrawal provided that they then recontribute it straight back into super and get a tax-deduction along the way for the contribution (subject to their concessional contribution limits not having been reached).

It's not for everyone and some people will genuinely need the money to cover living costs, but there seems to be some opportunity here.

Luis Cordero - Refresh Super

As of 22 March 2020, the Australian government have announced new measures to assist individuals facing increasing uncertainty during the economic downturn caused by COVID19.

Specifically in relation to your superannuation account, you may be eligible to receive up to $10,000 during this current 2020 financial year and then up to an additional $10,000 during the next financial year (2021FY).

But should you do it? 

Sure, if you really need it now, then you'll get the cash assuming there is cash available in your SMSF or superannuation account. But if you have to sell down assets to generate cash, it's more than likely that will you be worse off in the future owing to any possible capital losses you are incurring as a result of selling assets when the market values are quite low. If these circumstances change this point might become moot.

Also, the purpose of superannuation is for you to benefit after you've retired. Pulling out money now, can potentially have a significant impact on your final member balance available when that time comes. In other words, you're not allowing compound (time) earnings to do it's magic for you.

Keep the above in mind when you're making your decision - it's a tough call to make but only you can decide what's best for you during these tough times.

Otherwise, if you need help to make that decision, it's much better to seek personal financial advice.

Original article published here on 26 March 2020 on bsale.