www.esuperfund.com.au

Early Access


 
 
Preservation Age

Generally, you must reach preservation age before you can access your super. Use the following table to work out your preservation age.

Date of birth Preservation Age
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
From 01 July 1964 60

 

If you are aged under Preservation Age, you cannot access your Super Benefit unless you have an unpreserved benefit.  In most cases most Australians who are under Preservation Age will not have any unpreserved benefits and will have to wait until Preservation Age, in order to begin to access their Super Benefit.  It is however noted that it may be possible to access some or all of your Super Benefit when you are under Preservation Age under various other provisions as detailed below. 

 
 
COVID-19 (Novel Coronavirus)

Upon the receipt of written approval from the Australian Taxation Office (ATO), a Member may access their Preserved Super Benefit before they reach Preservation Age and are "Retired" if they are financially affected by the Coronavirus and satisfy one or more of the following requirements:

  • You are unemployed.
  • You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
  • On or after 1 January 2020, either
    • You were made redundant;
    • Your working hours were reduced by 20% or more;
    • If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.

Eligible Members will be able to apply to access up to:

  • $10,000 of their superannuation before 1 July 2020;
  • A further $10,000 from 1 July 2020 until 31 December 2020 (extended from 24 September 2020).

Applications need to be made to the ATO through the Member’s myGov account. Applications for the 2020-21 Financial Year can be made from 1 July 2020 to 31 December 2020 (extended from 24 September 2020). Importantly, if you have previously applied and accessed your superannuation in the 2019-20 Financial Year and wish to access a further amount up to $10,000 in the 2020-21 Financial Year, you will need to submit a new application through myGov provided you still meet the eligibility.

If the application is successful, the ATO will issue a determination evidencing the Member’s eligibility. Importantly you must not access your superannuation before the ATO confirms your eligibility and approves your application. Payments made under this provision are tax free.

If you access your superannuation under this special provision, you will be required to provide a copy of the ATO’s determination for audit purposes as part of the checklist completion process. For more information on the early release of superannuation benefits due to Coronavirus, please click here.

 
 
Severe Financial Hardship - Under Preservation Age

A Member may access some of their preserved Super Benefit if they are under Preservation Age and they are experiencing severe financial hardship.  Subject to the governing rules of the SMSF, that is the SMSF Trust Deed, Members can seek release part of their Super Benefit by reason of suffering severe financial hardship if they satisfy both of the criteria below.  If both criteria below are met, the Member may withdraw an amount not less than $1,000 and not more than $10,000 in each 12 month period beginning on the date of the first payment.

Criteria 1

The Member has written evidence from at least one Commonwealth Department or Agency responsible for administering a class of Commonwealth Income Support Payments (e.g. Centrelink) that they have received Commonwealth Income Support Payments for a continuous period of 26 weeks, and

Criteria 2

The Member is unable to meet reasonable and immediate family living expenses.

If you access your Super Benefits under Preservation Age under the above "Hardship" provisions, then the Taxable Portion of the amount accessed is subject to tax at 22%.  This tax should be budgeted for when accessing your Super under the "Hardship Provisions" when you are under Preservation Age.

 
 
Severe Financial Hardship - Over Preservation Age and 39 weeks

A Member may access some of their preserved Super Benefit if they are age over Preservation Age and 39 weeks and experiencing severe financial hardship.  Subject to the governing rules of the SMSF, that is the SMSF Trust Deed, Members can seek release of their benefits by reason of suffering severe financial hardship if they satisfy both of the criteria below.  In this case, if the Member meets the criteria below, the Member may access their total super benefit.

Criteria 1

The Member has written evidence from at least one Commonwealth Department or Agency responsible for administering a class of Commonwealth Income Support Payments that they have been on an eligible Commonwealth Government Income Support Payment for a cumulative period of 39 weeks after they reach Preservation Age; and

Criteria 2

The Member is not gainfully employed on a full time or part time basis on the date of the application for their benefit.

If you access your Super Benefits above Preservation Age and under age 60 under the above "Hardship" provisions, then the Taxable Portion of the amount accessed is subject to tax at 17%.  This tax should be budgeted for when accessing your Super under the "Hardship Provisions" when you are over Preservation Age.

 
 
Compassionate Grounds

Upon the receipt of written approval from the Australian Taxation Office (ATO), a Member may access their Preserved Super Benefit before they reach Preservation Age and are "Retired" on specified Compassionate Grounds. Compassionate Grounds apply where a Member does not have the financial capacity to meet an expense arising from the following:

  1. Pay for medical treatment or medical transport for the member or a dependant. Two doctors (at least one a specialist), need to certify that the treatment is necessary to treat a life threatening condition or alleviate acute or chronic pain or mental disturbance and that treatment or transport is not readily available through the public health system.
  2. Make a payment on a home loan to prevent foreclosure or forced sale by the mortgagee of the member's principal place of residence. A written statement is needed from the mortgagee, stating that the payment is overdue and that failure to pay will cause foreclosure or sale of the home. The statement must also detail the amount of three months' repayments and 12 months' interest on the outstanding loan at the time the statement is made. The payment is limited in each 12-month period to the amount equivalent to the sum required for three months' repayments and 12 months' outstanding interest.
  3. Modify the member's principal place of residence, or vehicle, to accommodate the special needs of a member, or a dependant, arising from severe disability.
  4. Pay for expenses associated with palliative care for the member, in the case of impending death.
  5. Pay for expenses associated with a dependant's palliative care, in the case of impending death, or their death, funeral or burial.

Please visit the ATO website for further information about the early release of superannuation benefits on compassionate grounds.

If you access your Super Benefits before Preservation Age under the above "Compassionate Grounds" provisions, then the Taxable Portion of the amount accessed is subject to tax at 22%.  This tax should be budgeted for when accessing your Super under the "Compassionate Grounds" Provisions when you are under Preservation Age.

 
 
Permanent Incapacity

Permanent Incapacity, in relation to a Member who has ceased gainful employment, means ill health, whether physical or mental, where the Trustee is reasonably satisfied that the Member of the SMSF is unlikely, because of the ill health, ever again to be engaged in gainful employment for which they are reasonably qualified by education, training or experience.  Importantly if you satisfy this condition you can access your Super Benefit at any time and with no restriction.  

Importantly accessing your Super Benefit under the "Incapacity" provisions must be approved by the Trustee of your SMSF (i.e. you).  This is not a "loophole" allowing you to access your Super Benefit when under Preservation Age.  You must demonstrate and have evidence that evidence that you have satisfied the above conditions. Typically this will involve medical certificates from at least two appropriately qualified Medical Practitioners confirming the Member's Incapacity (one certificate with at least two Medical Practitioners' signatures is also acceptable).  This evidence must be produced at Financial Year end to ESUPERFUND in order to finalise the SMSF Audit.

If you access your Super Benefits before Preservation Age under the above "Incapacity" provisions, then the Taxable Portion of the amount accessed is subject to tax at 22%.  This tax should be budgeted for when accessing your Super under the "Incapacity Provisions" when you are under Preservation Age.

 
 
Temporary Incapacity

Temporary Incapacity means ill-health (whether physical or mental) that has caused the member to cease to be gainfully employed but the illness does not constitute a permanent incapacity.  Subject to the governing rules of the SMSF, that is the SMSF Trust Deed, Members can seek release of their benefits by reason of suffering Temporary Incapacity if they satisfy both of the criteria below.

Criteria 1

It's not necessary for the member's employment to fully cease but, generally, a member would not be eligible for temporary incapacity benefits if they were receiving sick leave benefits.

Criteria 2

Generally, temporary incapacity benefits may be paid only from the insured benefits or voluntary employer funded benefits (i.e. salary sacrifice contributions that exceed the Superannuation Guarantee threshold).  If the member’s super benefit accumulated in the SMSF consists of only mandatory Superannuation Guarantee Contributions (SGC) and / or personal contributions, the member would not be eligible for temporary incapacity benefits.

Where a person is Temporarily Incapacitated a non-commutable income stream can be paid from their SMSF for:

  1. The purpose of continuing, in whole or part, the gain or reward which the Member was receiving before the temporary incapacity, and
  2. A period not exceeding the period of incapacity from employment of the kind engaged in immediately before the temporary incapacity.

Importantly accessing your Super Benefit under the "Incapacity" provisions must be approved by the Trustee of your SMSF (i.e. you).  This is not a "loophole" allowing you to access your Super Benefit when under Preservation Age.  You must demonstrate that you have satisfied the above conditions.  Typically this will involve the following evidence:

  1. Medical certificates from an appropriately qualified Medical Practitioner confirming the Member's Incapacity.
  2. Documentation evidencing the member has ceased gainful employment temporarily and no sick leave benefits were paid during the temporary incapacity period.
  3. Documentation evidencing the member was in receipt of any insurance benefits linked to the SMSF (if applicable).

The above evidence must be produced at Financial Year end to ESUPERFUND in order to finalise the SMSF Audit.

If you access your Super Benefits before Preservation Age under the above "Incapacity" provisions, then the Taxable Portion of the amount accessed is taxed at your marginal tax rate.  This tax should be budgeted for when accessing your Super under the "Incapacity Provisions" when you are under Preservation Age.

 
 
Terminal Illness

If the Member has a Terminal Illness they will be able to access their Super Benefit irrespective of their age.  To satisfy this condition of release, the Member must be diagnosed with a Terminal Illness and provide the Trustee(s) with certification from two (2) medical practitioners (at least one of whom is a specialist in the illness) stating that the Member is suffering an illness which in the normal course, would result in death in a period of 24 months from the date of certification despite reasonable medical treatment. Payments made under this provision are tax free.

 
 
Penalties for Early Access

If you begin to access your Super Benefit and do not meet one of the conditions allowing you to access your Super Benefit detailed on this "Access" section of our website, you are breaking the law and significant penalties may be imposed on you and SMSF (both criminal and civil).  So you must ensure you comply with the law when beginning to access your Super Benefit.