Can I Access My Super Early? Conditions for Release

Superannuation, often called “super,” is Australia’s system for retirement savings, where money is regularly contributed into a managed fund throughout an individual’s working life. While designed to provide financial support in retirement, specific, limited circumstances allow for early access to these funds. Accessing superannuation before reaching a certain age is an exception, not a routine option.

Standard Superannuation Access Age

Superannuation funds are preserved until an individual reaches their “preservation age” and meets a “condition of release,” such as retiring from the workforce. Preservation age varies depending on your birth year, gradually increasing from 55 for those born before July 1, 1960, to 60 for those born on or after July 1, 1964. For instance, if you were born between July 1, 1961, and June 30, 1962, your preservation age is 57. This framework ensures savings are retained for their intended purpose of supporting retirement.

Specific Early Release Conditions

Accessing superannuation early is permitted only under specific conditions, each with distinct eligibility criteria. These provisions aim to provide support during times of genuine hardship or specific life events. Meeting these conditions allows individuals to apply for early release.

Terminal illness

Terminal illness is defined as an illness or injury likely to result in death within a 24-month period. This must be certified by two registered medical practitioners, with at least one being a specialist in the relevant field. The certification period must not have expired at the time of application.

Temporary incapacity

Temporary incapacity allows for early release if an individual is temporarily unable to work, or must work reduced hours, due to a physical or mental medical condition. Funds released under this condition are paid as an income stream to cover living expenses during the period of incapacity.

Permanent incapacity

Permanent incapacity, also known as Total and Permanent Disability (TPD), applies when a medical condition or injury makes it unlikely that an individual will ever be able to work again in a job for which they are reasonably qualified by education, training, or experience. Certification from at least two medical practitioners is required to confirm the permanent nature of the condition.

Severe financial hardship

Severe financial hardship provisions allow for early release under specific circumstances. If you are under your preservation age plus 39 weeks, you must have received eligible government income support payments continuously for at least 26 weeks and be unable to meet reasonable and immediate living expenses. The minimum amount that can be withdrawn is $1,000, with a maximum of $10,000, and only one withdrawal is permitted within a 12-month period. If your super balance is less than $1,000, you may withdraw the remaining balance after tax.

For those who have reached their preservation age plus 39 weeks, severe financial hardship criteria require having received eligible government income support payments for a cumulative period of 39 weeks or more since reaching preservation age, and not being gainfully employed (working less than 10 hours per week) at the time of application. There is no maximum withdrawal limit once these criteria are met. Funds released for financial hardship are intended for essential needs, such as utilities, housing, and health costs, and cannot be used for day-to-day expenses or non-overdue debts.

Compassionate grounds

Compassionate grounds cover a range of specific situations where early access may be granted. These include paying for medical treatment or medical transport for a life-threatening illness or injury, or to alleviate acute or chronic pain, for yourself or a dependent. Palliative care for a terminal illness affecting yourself or a dependent also falls under this category.

Additional compassionate grounds include making modifications to a home or vehicle to accommodate a severe disability for yourself or a dependent. Preventing the foreclosure or forced sale of your primary residence due to an inability to meet loan payments is another valid reason. Covering death, funeral, or burial expenses for a dependent can also qualify for early release. To be eligible, the expense must be unpaid, and the applicant must demonstrate an inability to pay without accessing their super. Applicants must also be an Australian or New Zealand citizen or permanent resident.

First Home Super Saver (FHSS) Scheme

The First Home Super Saver (FHSS) Scheme allows individuals to save for a first home within their superannuation fund, leveraging tax concessions. Under this scheme, voluntary contributions (both before and after-tax) made since July 1, 2017, can be withdrawn. To be eligible, you must be 18 years or older, have never owned property in Australia, and intend to occupy the purchased property as your main residence for at least six months within the first year of ownership. There is an annual contribution limit of $15,000 and a total lifetime limit of $50,000 that can be released from July 1, 2022. After requesting a release, you have 12 months to sign a contract to purchase or construct a home, with a possible 12-month extension from the tax office.

Small superannuation balances

For individuals with very small superannuation balances, less than $200, early access may be possible if their employment has been terminated. This provision is designed to simplify the management of small, inactive accounts.

Temporary residents leaving Australia

Temporary residents leaving Australia permanently may be eligible for a Departing Australia Superannuation Payment (DASP). To qualify, the individual must have accumulated superannuation while on an eligible temporary resident visa, their visa must have ceased (either expired or cancelled), they must have left Australia, and they must not be an Australian or New Zealand citizen or a permanent resident.

Applying for Early Release

The process for applying for early superannuation release depends on the specific condition under which access is sought. It is important to identify the correct authority responsible for assessing your application. Gathering all necessary documentation beforehand can help streamline the process.

Applications for early release on compassionate grounds and through the First Home Super Saver Scheme are lodged directly with the Australian Taxation Office (ATO). This can be done online via the myGov portal or by submitting a paper form if online access is unavailable.

For other conditions, such as terminal illness, temporary or permanent incapacity, severe financial hardship, and small balance withdrawals, applications are made directly to your superannuation fund. Temporary residents seeking a Departing Australia Superannuation Payment (DASP) can apply through the ATO’s online system or directly with their super fund.

Required documentation varies by condition but includes medical reports from certified practitioners for illness or incapacity claims. For severe financial hardship, proof of eligible government income support payments and evidence of inability to meet living expenses (like overdue bills) are necessary. Proof of identity, such as certified copies of identification documents, is required for any type of release.

After submission, processing times can vary. ATO-assessed applications, such as those for compassionate grounds, may take up to 14 days, while super funds might process financial hardship requests within five business days. Applicants should expect communication from the assessing body, which may include requests for additional information to support the claim.

Tax Considerations for Early Release

Receiving an early release of superannuation can have tax implications, and the amount of tax payable depends on several factors, including the type of release, your age, and the components of your superannuation balance. Understanding these considerations is important before proceeding with a withdrawal.

If you are under 60 years old, any taxable component of a lump sum superannuation withdrawal, such as those for severe financial hardship or compassionate grounds, is taxed at a rate between 17% and 22%, including the Medicare levy. The specific tax rate applied is the lower of your marginal income tax rate or this special superannuation lump sum rate. However, if you are 60 years or older, lump sum withdrawals from a taxed superannuation fund are tax-free.

Benefits paid due to a terminal medical condition are tax-free if withdrawn within 24 months of certification. The tax-free component of any superannuation balance is not subject to tax, regardless of your age or the reason for withdrawal.

Under the First Home Super Saver Scheme, the assessable FHSS amount, which includes eligible contributions and associated deemed earnings, is taxed at your marginal income tax rate, less a 30% tax offset. For temporary residents receiving a Departing Australia Superannuation Payment (DASP), the payment is taxed before it is paid out, with specific tax rates applying to different components of the superannuation balance. Early withdrawals can also impact eligibility for certain government welfare payments.