When Can I Withdraw Money From My Super?

Superannuation, often called “super,” represents Australia’s primary system for retirement savings, designed to provide financial support during an individual’s post-working years. Employers make mandatory contributions to these funds, which are then invested to grow over time. While superannuation is a long-term investment intended for retirement, specific conditions allow for earlier access to these savings. Understanding these regulations is important for effectively managing your financial future.

General Conditions for Accessing Super

Accessing superannuation occurs when an individual reaches their “preservation age” and meets a condition of release. This age varies by birth year, from 55 for those born before July 1, 1960, to 60 for those born after June 30, 1964. Once this age is met, a condition of release must be satisfied to allow super withdrawals.

A common condition of release is “retirement,” meaning ceasing gainful employment after reaching preservation age with no intention of returning to work. If you reach age 60 and cease an employment arrangement, you can access your super. Full access to superannuation also becomes available upon reaching age 65, regardless of employment status.

Upon meeting these conditions, individuals can choose to access their super as a lump sum or as an income stream. A lump sum is a one-time payment, while an income stream provides regular payments (pension).

Specific Circumstances for Early Access

In specific situations, individuals may access their superannuation before reaching their preservation age or retirement. These “early release” provisions address circumstances of significant need or hardship. One pathway is on compassionate grounds, covering expenses like essential medical treatment or transport for yourself or a dependant, palliative care, or funeral costs for a dependant. It can also apply to prevent home foreclosure or forced sale due to mortgage or council rate arrears. Applications for compassionate release are made directly to the Australian Taxation Office (ATO) and must be for unpaid expenses.

Another option is for severe financial hardship. If under preservation age, you may qualify if you have received eligible government income support payments for at least 26 continuous weeks and cannot meet reasonable and immediate family living expenses. A maximum of $10,000 (gross) may be released in any 12-month period. For those who have reached preservation age, eligibility requires receiving eligible government income support payments for a cumulative 39 weeks since reaching preservation age, and not being gainfully employed when applying. Superannuation funds assess these applications directly.

Super can also be accessed early due to a terminal illness. This requires two registered medical practitioners, with at least one being a specialist, to certify an illness or injury likely to result in death within 24 months. If temporarily incapacitated due to a physical or mental condition that prevents working or reduces hours, you may receive an income stream from your super. For permanent incapacity, where a physical or mental condition is likely to prevent future gainful employment, super can be accessed as a lump sum or income stream, requiring certification from two medical practitioners.

If you cease employment and your super account balance is less than $200, you may access these small amounts.

Withdrawing Super When Leaving Australia

Temporary residents who have worked in Australia and accumulated superannuation may be eligible for a Departing Australia Superannuation Payment (DASP). Eligibility for DASP requires you were a temporary resident, your visa has ceased, you have departed Australia, and you do not hold any other active Australian visa. Australian and New Zealand citizens, as well as Australian permanent residents, are not eligible for a DASP.

The DASP applies to super contributions made by employers and any earnings on those contributions. The process for claiming a DASP begins after you have left Australia. DASP is subject to specific tax rates, which differ from other superannuation withdrawals.

The Withdrawal Process and Taxation

The process for withdrawing superannuation involves applying directly to your super fund. For compassionate grounds, the application is submitted to the Australian Taxation Office (ATO), which notifies your fund of approval. Essential documentation includes proof of identity and your bank account details for payment. Your super fund will also require specific forms for the withdrawal.

Applications can be submitted through online portals, via paper forms, or by directly contacting your super fund. Processing times vary, but for DASP claims, it takes around 28 business days. Your super fund will communicate the progress of your application.

Tax implications vary based on your age and the type of withdrawal. Super benefits consist of a tax-free component (non-concessional contributions) and a taxable component (concessional contributions and earnings). When super is withdrawn as a lump sum before preservation age, the taxable component is taxed at marginal income tax rates, often with a 20% tax offset. For withdrawals between preservation age and age 59, the taxable component up to a specific low rate cap is tax-free, with amounts exceeding this cap taxed at 17%. Once you reach age 60 or older, superannuation lump sum withdrawals are tax-free.

For superannuation accessed as an income stream (pension), withdrawals are taxed differently. If you are under 60, the taxable component is taxed at your marginal rates, but with a 15% tax offset. For individuals aged 60 and over, income stream payments from a taxed source are tax-free.

Early release withdrawals due to compassionate grounds or severe financial hardship are taxed as normal superannuation lump sums. If you are under 60, this results in a tax rate between 17% and 22%. Withdrawals due to a terminal illness are tax-free.

The Departing Australia Superannuation Payment (DASP) has distinct tax rates. For non-working holiday maker visa holders, the tax-free component is not taxed. The taxed element of the taxable component is subject to a 35% withholding tax, and any untaxed element is taxed at 45%. For working holiday maker visa holders, a higher rate of 65% applies to both the taxed and untaxed elements of the taxable component, while the tax-free component remains untaxed. Provide your Tax File Number (TFN) to your super fund, as failing to do so can result in a higher tax being withheld from your super benefits.