Can you legally access your super early?

How can I access my super early?

If times are hard and you’re financially stretched, you may be able to unlock super and gain access to your funds as an early release, but the conditions of release are strictly limited.

The conditions for early release of superannuation savings generally fall into two categories:

1. Severe financial hardship, such as the bank threatening to sell your house
2. Compassionate grounds, such as to pay for a funeral, medical expenses or palliative care

Remember that these are NOT ‘loopholes to access super’ so you can make a personal purchase. If you’re wondering if you can access your super to buy a car or caravan, the answer will likely be no.

Similarly, you cannot use early release of super for a house deposit, or access super to pay a lump sum into your mortgage. However, making voluntary super contributions via the First Home Super Saver (FHSS) Scheme could help you save a deposit.

What can I access my super early for?

Here’s what you can and can’t do with your early-access superannuation, according to the Australian Tax Office (ATO) and Services Australia (SA).

1. Avoid losing your home

If you need mortgage assistance, you may be able to access some of your super early if:

• the property under threat is your usual place of residence
• you are responsible for the mortgage repayments or rates
• your bank or council is threatening to repossess or sell your home due to arrears on your mortgage or council rates

However, you may have problems if:

• you don’t own the property, for example, if you’re renting
• you are in arrears on your mortgage or council rates but your bank or council is not threatening to repossess or sell your home
• you want the money for an investment property

2. Manage severe financial hardship

If you’re facing financial hardship, you may be able to access some of your super early if you’ve received government income support payments continuously for 26 weeks and can’t meet reasonable and immediate family living expenses.

You may have problems if you need to access less than $1,000 or more than $10,000 (the minimum and maximum amounts), or you plan on withdrawing from your super more than once in a 12-month period (not allowed).

3. Manage a terminal medical condition

If you have a terminal medical condition, you may be able to access some or all of your super early if your illness or injury is likely to result in your death within 24 months, two medical specialists certify this is the case, and one of those doctors is a specialist in the area related to your illness or injury.

The ATO says if your fund doesn’t allow you any early access due to a terminal medical condition, you may be able to move your super to a different fund. Check first though to make sure you don’t lose any benefits or insurance you still need.

4. Get palliative care

If you need to pay for palliative care for you or a dependent you may be able to access some of your super early if you or your dependent has a terminal illness and you or your dependent need assistance paying palliative care expenses.

5. Manage temporary incapacity

If you have a physical or mental medical condition, you may be able to access some of your super early if you are temporarily unable to work or you need to work less hours.

6. Manage permanent incapacity

If you have a physical or mental medical condition, you may be able to access some or all of your super early if it’s likely to stop you from ever working again in a job you were qualified to do by education, training or experience, and at least two medical practitioners certify this is the case.

7. Make home or car modifications for disabilities

You may be able to access some of your super early if you or your dependent has been diagnosed with a severe disability and you need to modify your home (meaning principal place of residence) or car to suit, or if you need to buy disability aids to accommodate a severe disability.

8. Pay for funeral expenses

On compassionate grounds, you may be able to access some of your super early if a dependent has passed away and you need help paying funeral or burial expenses.

You may have problems accessing super early if you are applying for funeral expenses for someone who is not a dependent, your dependent’s funeral has taken place and has been paid for, or you are applying for venue hire or catering for a wake.

9. Access a super balance of less than $200

You may be able to access all your super early if your employment is terminated and the balance of your super is less than $200, or you have found a lost super account with a balance less than $200.

The ATO says you should contact your super fund to request access. No tax is payable on balances of less than $200.

How do I get early access to my super?

You can apply for early access to your super for compassionate reasons via the ATO’s website or by calling 13 10 20 (8am–6pm, Monday–Friday) to ask for a paper application form. For all other applications you should contact your super fund.

You may need to prove you have no other means of paying for permitted expenses other than through early access to your super. The amount you can withdraw may also be limited to what you reasonably need to meet unpaid expenses.

How will I be taxed if I get early access to my super?

The tax implications of accessing your super early vary depending on your circumstances and the reasons you are applying for the funds. Your super fund should be the first point of contact for more information about the early release of any funds and the associated fees or tax liabilities.

According to the ATO, if you apply for early access to your super on compassionate grounds because you have a terminal illness, your funds will be paid as a lump sum and tax-free if withdrawn within 24 months of medical certification.

If you have a permanent incapacity, you can choose to receive your super funds early as either a lump sum or as an income stream of regular payments. How you will be taxed depends on your own situation. The ATO says you may be eligible for concessional tax treatment if your permanent incapacity is certified by at least two medical practitioners.

If you get early access to your super due to a temporary incapacity, you will typically receive the funds as regular payments over the time you are unable to work. This will be taxed as a normal income stream, with no special tax rates.

In the case of severe financial hardship, the maximum you can apply for is $10,000 and you can only make one withdrawal in any 12 month period. The amount you will be taxed depends on your own circumstances.

What are the long-term effects of accessing super early?

Withdrawing any amount of your super early will likely affect your retirement plans. Even a small withdrawal could turn into a big loss of future wealth, as the money you invest in super across your working life is used to make investment returns and compounds over time.
Depending on your circumstances, it may be possible to rebuild some of your accessed super balance by making some voluntary contributions to your super later on. This could potentially help to offset some of the effect on your retirement balance in the future.

You might want to consider seeking some independent professional financial advice before making any changes, and also talk through options with your own super provider.

What happens if I illegally access my super early?

The ATO warns against some dodgy schemes that encourage you to get early access to your super for reasons other than those allowed through financial hardship or compassionate grounds. For example, they may try to persuade you to transfer your super to a self-managed super fund so you can buy a house, go on holiday, or pay off credit card debt.

The ATO says these schemes are illegal and heavy penalties may apply if you get involved. If you have any concerns or are worried you have been approached by someone who is encouraging you to seek illegal access to your super fund, then contact the ATO by phone 13 10 20 or email Super-IER@ato.gov.au.

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