Early release as a condition of release
The ATO counts meeting a condition that allows early access among the conditions of release, so early release is a lawful way out, on its own terms. Taking super any other way is not: the ATO says it is illegal to withdraw super without satisfying a condition of release. The ordinary conditions are in when super can be accessed.
Where the application goes depends on the ground. Moneysmart says a person may apply through their super fund, the ATO, or both, depending on their situation.
Severe financial hardship
Moneysmart describes this ground as being for people who cannot pay urgent living costs and currently receive income support. The ATO sets out two separate sets of conditions, one for a person under their preservation age and one for a person who has reached it plus 39 weeks. Preservation age is the age at which super can be accessed on retiring or starting a transition to retirement income stream. Under each set, a person must meet both conditions.
| Condition | Under preservation age | Preservation age plus 39 weeks |
|---|---|---|
| Income support | Eligible government income support payments received for a continuous 26 weeks | Eligible government income support payments received for a cumulative 39 weeks after reaching preservation age |
| Other condition | Not able to meet reasonable and immediate family living expenses | Not gainfully employed at the time of applying |
| How much, how often | At least $1,000 and at most $10,000; with a balance under $1,000, up to the remaining balance after tax. One withdrawal in any 12-month period | No restriction on the amount, once the age condition and the other 2 conditions are met |
The application goes to the fund, not the ATO. The ATO’s words: “You need to apply to your super fund directly for release of super on financial hardship grounds. The ATO does not process severe financial hardship requests.” If the fund asks for evidence, Services Australia can be asked for a letter confirming the income support received for the relevant period. Moneysmart notes that the fund decides whether the person qualifies.
Compassionate grounds
Moneysmart says super may be released early on compassionate grounds to pay certain costs for a person or their dependant, where there is no other way to pay, and that evidence such as quotes or invoices is needed. One example it gives is dental work, which can qualify only in limited cases, and not when the work is cosmetic.
The National Debt Helpline adds a case that matters to people behind on a mortgage: some super may be accessible early for specific expenses that prevent the foreclosure or forced sale of the home, whether by the mortgage lender, the council or a court order over a debt owed to someone else.
The ATO says there are 5 conditions a person must meet to be eligible for compassionate release, and sets them out on its compassionate grounds page. It also warns that there are consequences for people who access super on compassionate grounds inappropriately.
Illness, injury and a terminal condition
Permanent incapacity
Moneysmart describes permanent incapacity as being unlikely to work again in a role the person is reasonably qualified for by education, training or experience. A person in that position may also be able to claim insurance held through their super.
Temporary incapacity
Where a person has income protection cover in their super, Moneysmart says they may be able to claim while unable to work for a period because of illness or injury, with the cover and conditions depending on the policy.
A terminal medical condition
On this ground, Moneysmart says, one of the doctors must be a specialist in the person’s condition, and the doctors must confirm that the person is expected to live for less than 24 months.
Two narrower cases
Moneysmart lists a few other situations in which super may come out before retirement, including these two. A person who worked in Australia on a temporary visa can usually claim their super on leaving the country, and in limited cases a person may be able to withdraw a small balance, for example from an account holding less than $200.
Early access scams
Moneysmart and Scamwatch both warn about offers to get super out early. Moneysmart says a scammer may offer to help someone access their super, move it into a self-managed super fund or invest it for them, and Scamwatch describes superannuation scams that offer early access, often through a self-managed fund or for a fee, sometimes with the scammer posing as a financial adviser. Moneysmart adds that some people have lost retirement savings after being pressured into switching funds, setting up self-managed funds or investing in unsuitable products.
Moneysmart’s own advice for anyone unsure is to contact their super fund or the ATO, using contact details from the fund’s website, app or statement. Tax on money taken out early is covered in the guide to tax on super.