How to Withdraw Your Superannuation Funds

Superannuation, or “super,” is Australia’s national retirement savings program, helping individuals save for post-working life. Employers contribute a percentage of earnings into a superannuation fund, which invests these funds. While super is for retirement, strict regulations govern early access, generally restricting withdrawals to specific circumstances.

Understanding Your Eligibility to Withdraw

Accessing superannuation before retirement age requires meeting “conditions of release.” The most common way is reaching your preservation age and formally retiring. Preservation age varies by birth date; for those born on or after July 1, 1964, it is 60. You can access super upon retiring at this age, or at 65 even if not fully retired.

Health circumstances can also trigger early release. A terminal medical condition allows full access to super benefits if two medical practitioners, one a specialist, certify the illness will likely result in death within 24 months.

If you suffer a permanent physical or mental incapacity preventing suitable employment, you may access your super. This is Total and Permanent Disability (TPD), requiring medical evidence. Your super fund assesses claims based on medical reports and its TPD definition.

Temporary incapacity due to physical or mental illness can allow periodic super payments. These income stream payments replace lost income during temporary disability and cease once you return to work.

Severe financial hardship provisions allow early access. To qualify, you must have received eligible government income support for 26 continuous weeks and be unable to meet reasonable family living expenses. If approved, you can typically withdraw a single lump sum of $1,000 to $10,000, once every 12 months.

Compassionate grounds allow early release for specific circumstances. These include paying for medical treatment for a life-threatening illness or injury, palliative care, or funeral expenses for a dependent. It also covers expenses to prevent home foreclosure or to modify a home or vehicle for severe disability. Applications are made through the Australian Taxation Office (ATO), which assesses each case.

Individuals with small super balances may access funds under specific conditions. Former temporary residents who have left Australia can apply for a Departing Australia Superannuation Payment (DASP) for accumulated super benefits. This payment includes employer contributions and earnings, minus applicable taxes.

If your super balance is below a threshold and inactive, your fund may transfer it to the ATO as “unclaimed super.” You can then claim this money directly from the ATO.

Gathering Required Information and Documents

Before any superannuation withdrawal, gather all necessary information and supporting documents. Accurate personal identification is required, typically including a current Australian driver’s license or passport. Some funds accept other forms like a birth certificate, citizenship certificate, or Centrelink pension card.

It is also important to have your superannuation fund member number and precise account details readily available. You will need to provide your full legal name, date of birth, current address, and Tax File Number (TFN) as part of the application. These details must precisely match the identification documents provided to avoid discrepancies. Additionally, you will need to supply the bank account details where you wish the funds to be deposited, including the account name, BSB (Bank State Branch) number, and account number.

Beyond general personal and account information, specific supporting documentation is crucial, depending on the eligibility condition for withdrawal. For withdrawals based on a terminal medical condition or permanent incapacity, detailed medical reports from qualified practitioners are essential. These reports must clearly articulate the diagnosis, prognosis, and impact on your ability to work. For temporary incapacity, medical certificates outlining the period of incapacity and inability to work are necessary.

If applying due to severe financial hardship, you will need to provide evidence of receiving eligible government income support payments for the required duration, along with documentation demonstrating your inability to meet reasonable living expenses. For compassionate grounds, an approval letter from the Australian Taxation Office (ATO) is mandatory, as the ATO assesses these applications. Similarly, for a Departing Australia Superannuation Payment (DASP), the ATO’s online system may confirm your immigration status, but specific forms or proof of visa cessation might be required.

Most superannuation funds provide withdrawal application forms on their websites. The ATO also provides forms for specific situations like DASP or compassionate grounds. Review the form to understand all required fields and ensure information is complete and accurate before proceeding.

The Super Withdrawal Application Process

After gathering all necessary information and completing the application forms, submit your request. The method of submission depends on the type of withdrawal and where the superannuation is held. For most standard withdrawals, such as those made upon reaching preservation age and retirement, applications are submitted directly to your superannuation fund. Many funds offer convenient online portals for submitting applications electronically, which is often the quickest method.

Alternatively, you can typically submit a paper application form via mail to your super fund. Some funds may also allow in-person submission at their offices. For specific types of early release, such as compassionate grounds or Departing Australia Superannuation Payments (DASP), the application process begins with the Australian Taxation Office (ATO). The ATO provides an online application system for DASP, which verifies eligibility with the Department of Home Affairs before forwarding the claim to your super fund for payment.

After submitting your application, you should receive a confirmation from your super fund or the ATO. For DASP applications, processing is typically 28 days from a completed application. Other withdrawal types usually process within a few business days, though some may take longer if identity verification or additional information is needed.

During the assessment process, your super fund will review your application and supporting documentation to ensure all eligibility criteria are met. They may contact you for further clarification or to request additional documents if anything is unclear or missing. Once approved, the funds will be transferred to your nominated bank account. It is advisable to keep a record of your submission and note any reference numbers provided for tracking purposes.

Taxation of Super Withdrawals

Understanding the tax implications of superannuation withdrawals is important, as taxation affects the net amount received. Superannuation balances are generally comprised of two components: a tax-free component and a taxable component. The tax-free component typically includes after-tax contributions that you have made, while the taxable component consists of employer contributions, salary sacrifice contributions, personal contributions for which a tax deduction was claimed, and investment earnings. When a withdrawal is made, it is generally taken proportionally from both components.

The tax rates applicable to super withdrawals depend primarily on your age and whether the withdrawal is taken as a lump sum or an income stream. If you are 60 years old or over, any lump sum withdrawals from a taxed super fund are generally tax-free. For individuals under 60, the taxable component of a lump sum withdrawal is subject to tax.

For those between their preservation age and 59, the first portion of the taxable component of a lump sum withdrawal may be tax-free, up to a “low rate cap” amount. For the 2025-26 financial year, this low rate cap is $260,000. Amounts exceeding this cap are taxed at 15% plus the Medicare levy. If you are under your preservation age and withdraw a lump sum due to specific early release conditions, the taxable component is generally taxed at 20% plus the Medicare levy.

Special tax rules apply to Departing Australia Superannuation Payments (DASP). These payments are taxed before they are released, and the tax rate depends on your visa type and the components of your super balance. For non-Working Holiday Maker visas, the tax-free component is not taxed, but the taxable component is taxed at 35%. If you held a Working Holiday Maker visa, a higher tax rate of 65% applies to the taxable component. DASP does not need to be included in your Australian tax return.

The taxation of superannuation death benefits varies significantly based on the beneficiary’s relationship to the deceased. If a superannuation lump sum death benefit is paid to a “tax dependent” (such as a spouse, former spouse, or a child under 18), the entire payment, including both tax-free and taxable components, is generally tax-free. For beneficiaries who are not considered tax dependents (e.g., an adult child), the tax-free component remains untaxed, but the taxable component is subject to tax. If the super fund has already paid tax on the amount, the taxable component is typically taxed at a maximum rate of 15% plus the Medicare levy.

Superannuation withdrawals can interact with other financial aspects, including Centrelink payments. While money withdrawn from super is not treated as income for social security, what you do with it can affect your Centrelink income and assets tests. For instance, funds deposited into a bank account will be counted as an asset. Seeking professional tax advice tailored to your circumstances is advisable before making any withdrawals.