Can I Take Money From My Super Early?

Superannuation in Australia is a compulsory savings system designed to provide financial support during retirement. Employers contribute a percentage of an employee’s wages into a superannuation fund, which then invests these funds on the employee’s behalf. The primary purpose of superannuation is to accumulate wealth over a working lifetime, ensuring individuals have a financial base when they cease employment. These funds are generally preserved, meaning they cannot be accessed until certain conditions are met, typically at retirement.

Accessing Superannuation at Retirement

Accessing superannuation normally occurs when an individual meets specific “conditions of release.” The most common condition is reaching a “preservation age,” which varies by birth year. For those born on or after July 1, 1964, the preservation age is 60. Once this age is reached, superannuation can be accessed if the individual retires from gainful employment, or if they are 65 or over, regardless of employment status. At 65, funds can be taken as a lump sum or income stream.

Specific Conditions for Early Release

While primarily for retirement, Australian law permits early superannuation access under limited circumstances.

Compassionate Grounds

Compassionate grounds cover essential medical treatment for a life-threatening illness, alleviating severe pain, or addressing a chronic medical condition for the individual or a dependent. This also extends to funeral or burial expenses for a dependent, preventing foreclosure or forced sale of a primary residence, and modifying a home or vehicle to accommodate a severe disability. Applications typically relate to unpaid expenses, though funds may be released to repay amounts borrowed for these purposes.

Severe Financial Hardship

Severe financial hardship allows access if an individual has received eligible government income support for 26 continuous weeks and cannot meet immediate living expenses. The minimum withdrawal is $1,000, and the maximum is $10,000 within any 12-month period, unless the individual has reached their preservation age plus 39 weeks. If the super balance is less than $1,000, the remaining balance can be withdrawn.

Terminal Medical Condition

A terminal medical condition allows early release if two medical practitioners (one a specialist) certify the individual is likely to die within 24 months. There are no set limits on the amount, and the payment is generally tax-free if withdrawn within 24 months of certification.

Temporary Incapacity

Temporary incapacity permits access if an individual is temporarily unable to work or needs reduced hours due to a medical condition. This often relates to accessing super-linked insurance benefits, typically as an income stream.

Permanent Incapacity

Permanent incapacity (Total and Permanent Disability or TPD) allows access if a medical condition is likely to prevent the individual from ever working again. This requires certification by two medical practitioners.

Departing Australia Superannuation Payment (DASP)

For eligible temporary residents permanently leaving Australia, the DASP allows withdrawal after their visa ceases and they leave the country.

Small Balances

Individuals may also access very small super balances (typically less than $200) if employment is terminated or a lost account with a low balance is found.

The Application Process for Early Release

The application process for early superannuation release varies by condition. Applications for compassionate grounds are generally made through the Australian Taxation Office (ATO) online services, often accessible via a myGov account. Severe financial hardship applications, however, are handled directly by the super fund, and may require a letter from Services Australia confirming income support. Applicants must gather all required documentation, such as medical reports, financial statements, or proof of government benefits, to accurately reflect their eligibility.

For other conditions (terminal medical, temporary or permanent incapacity, DASP), applications are typically submitted directly to the individual’s super fund. Each super fund has its own specific forms and requirements, so contacting them directly to understand their process and necessary supporting documents is advisable. After submission, the ATO may take up to 14 days to process online applications for compassionate grounds, with paper applications potentially taking longer. Super funds are generally expected to process payments within five business days once they receive approval from the ATO or complete their own assessment, though delays can occur if additional verification is needed.

Tax Treatment of Early Super Release

Early superannuation withdrawals can have tax implications, as they are typically subject to taxation. Superannuation balances generally consist of tax-free and taxable components. For most early releases, the taxable component is taxed as a super lump sum. If the individual is under 60, this is generally taxed at a rate between 17% and 22%, plus the Medicare levy. The super fund typically withholds this tax amount before paying out the funds.

However, tax treatment can vary significantly based on the specific condition of release. For instance, withdrawals due to a certified terminal medical condition are generally tax-free if paid as a lump sum within 24 months of certification. Payments for permanent incapacity may also be tax-free, depending on the specifics and whether the withdrawal is certified by medical practitioners. For temporary incapacity, withdrawals are taxed as a normal super income stream. The Departing Australia Superannuation Payment (DASP) also has specific tax rates applied before payment.