To be able to access benefits from an SMSF, a Member must meet a condition of release under Superannuation law preservation rules. The Trust Deed sets out the rules of the SMSF’s and can be restrictive, so it is possible that a benefit can be payable under the super laws but not under the rules of your SMSF. In order for a Member to withdraw from the contributions to superannuation, one or more of the following conditions of release must be satisfied:
- Has reached their preservation age and retires permanently from the workforce
- Has reached their preservation age and begins a transition to retirement income stream
- Reaching the age of 60 and retired
- Reaching the age of 65 (even if Member has not yet retired)
In some cases, Members are allowed to have access to their super benefits before reaching their preservation age. These are:
- Terminating gainful employment
- Permanent incapacity
- Temporary incapacity
- Severe financial hardship
- Compassionate grounds (e.g. medical treatment, palliative care, funeral expenses and disability aids)
In order to access Super balance on Compassionate grounds, SMSF Members will need to send an application to the ATO. Please see the ATO page here for the application instructions.
Additionally, Members will also need to provide medical documents from registered health practitioners to support the Member’s eligibility for the release. Health practitioners can assist their patients applying for early access on compassionate grounds by completing the ATO Medical Report Form. Please also see the ATO page here for medical report requirements from the ATO.
- The ATO may approve early access to super to cover expenses for dental treatment. If it is regarded as essential or life -threatening. Be midnful super can not use to cover dental expenses for cosmetic purposes.
- Terminal medical condition
- Super Balance Less than $200
- First Home Super Saver scheme
From 1 July 2020 to 31 December 2020, the ATO announced an early access to Super in response to the COVID-19 crises. For more info, please click here.
Eligibility criteria and how to apply for a condition of release of Super
To determine whether you are eligible for a condition of release of Super, click here. For more information about tax applied to these conditions, please view the ATO guidance on Withdrawing your Super. For more information about how to start your pension, please refer to our pension page.
Frequently Asked Questions
Am I allowed to access my super balance if I become disabled?
Yes, superannuation benefit can be accessed for disability under a Permanent Incapacity condition of release. Referring to SIS Regulation 1.03C, a Permanent Incapacity condition of release is met if the Trustee of the Fund is reasonably satisfied that the Member is unlikely, because of physical or mental ill-health, to ever again engage in gainful employment for which the Member is reasonably qualified by education, training or experience. In addition, the Tax Legislation notes allows for Concessional Tax treatment if there are at least two medical certificates that confirms the Member’s disability.
Members have the following options when accessing their benefits under Permanent Incapacity condition:
- Lump sum withdrawal or roll over to another super fund
- Lump sum withdrawals may be taxed depending on the Member’s age and working conditions. However, a Tax-free uplift can be applied to allow a concessional tax treatment for a lump sum withdrawal.
- Retain your Member balance in accumulation phase for future withdrawals
- Commence a Pension income stream
In addition, the Member can also use a combination of the three options listed above.
What happens when I access my Super without meeting a condition of Release?
The Sole Purpose of an SMSF is to provide retirement benefits or death benefits to the Members of the SMSF.
Accessing Super without meeting a condition of release is a breach with the ATO and you may face financial penalties. The ATO provides more details and the implications when super is accessed illegally, here.
Inappropriate access to super on compassionate grounds
The ATO has increased efforts to detect and reject improper early access to superannuation due to the following reasons:
Submitting forged or fabricated documents to claim eligibility
Participating in illegal promoter schemes involving health professionals, registered agents, or others encouraging early access.
Providing inaccurate or fraudulent medical reports.
Using released funds for non-approved purposes.
Supplying super funds with fake ATO approval letters.
This is also deatiled by the ATO here.