SMSF Basics – Early Release of Super – What is allowed?

SMSF Basics – Early Release of Super – What is allowed?

SMSF Basics – Early Release of Super – What is allowed?

The Australian Tax Office (ATO), Department of Human Services and Monet Smart websites all supply information on certain circumstances where it may be possible to gain early release of your super –

From the ATO site –

There are very limited circumstances when you can access your super savings early. These circumstances are mainly related to specific medical conditions or severe financial hardship.

Be aware that some promoters claim to offer early access to your super savings by transferring your super into a self-managed super fund. These schemes are illegal and heavy penalties apply if you participate. For more information, refer to Illegal super schemes – beware of offers to withdraw your super early.

O  Access on compassionate grounds

O  Access due to severe financial hardship

O  Access due to terminal medical condition

O  Access due to temporary or permanent incapacity

O  Super less than $200

The Department of Human Services site 

You can apply for your superannuation to be released early on specified compassionate grounds or if you are experiencing severe financial hardship.

Specified compassionate grounds

We assess applications for the early release of superannuation in certain circumstances on compassionate grounds and determine if you meet the specific legislative requirements.

Read more about specified compassionate grounds[1]

Other grounds for release

Generally, you cannot access your superannuation before you reach your preservation age.

There are limited circumstances where the law allows you to access your superannuation early. Most of the grounds under which you can access your superannuation early are accessed directly through your superannuation fund. These circumstances include:

  • Severe financial hardship
  • Terminal illness
  • Permanent incapacity
  • Balances of $200 or less
  • Permanent departure from Australia

If you believe any of these apply to you, you should contact your superannuation fund.

Severe financial hardship

You can apply for early release of superannuation benefits on the grounds of severe financial hardship. Applications are made directly to your superannuation fund.

To support your application, you can ask for a confirmation letter from any service centre[2] or by contacting us[3]. The letter is only valid for 21 days from the date of issue and confirms that you meet specific criteria. The letter will show that you have received and are still receiving an eligible income support payment for the required period.

Alternatively, your superannuation fund may be able to check your eligibility using the Customer Confirmation eService[4], if you have given them permission to do so.

Early release of superannuation may impact benefits you or your partner receive including, but not limited to, Family Tax Benefit, Child Care Benefit or an income support payment.

The superannuation fund trustee may charge you fees for the early release of your superannuation. Any early release of superannuation may also be taxed.

Terminal illness

If you are terminally ill, you can apply directly to your super fund for the early release of your superannuation. You do not need to submit an application to us.

You will need to provide your super fund a certificate from 2 medical practitioners, including a specialist. The certificate must state that you suffer from an illness which is likely to result in death within 24 months.

Your super fund will let you know what documents are needed and will decide if your superannuation benefits will be released.

Superannuation released early on grounds of terminal illness is tax free.

You should also seek advice from your superannuation fund about the implications of early release for any insurance you hold through the fund.

Contact your superannuation fund for more information.

Temporary residents and early superannuation release

The early release of superannuation benefits on specified compassionate grounds is available to Australian and New Zealand citizens and permanent residents only. However, if you are a temporary resident, you may be eligible if you applied before 1 April 2009, or if you hold an Investor Retirement subclass 405 visa or Retirement subclass 410 visa.

If you do not meet the criteria, you cannot apply for the early release of your superannuation on specified compassionate grounds.

You can apply directly to the Australian Taxation Office[5] for early release of benefits if you are in Australia temporarily and will be leaving the country permanently.

If you are not eligible for the early release of superannuation

We can offer support services if you are experiencing severe financial hardship. We can also help you get financial counselling as well as personal or family counselling from social workers. In some cases, special one off payments may be available if you are experiencing extreme circumstances.

Visit your local service centre[2] for more information.

Financial advice

It is important to make sure that accessing your superannuation benefits is the right financial option for you.

The amount of superannuation you receive may be included in your taxable income, which can affect your financial situation. We recommend that you seek independent financial advice before making an application for the early release of your superannuation.

We also recommend that you contact us[6] if you or your partner receive a Centrelink payment. A release may impact any benefits you or your partner receive including Family Tax Benefit, Child Care Benefit or income support payment.

The site also tells how to apply – there is a TAB to click for more info.

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About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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