Early release of super explained

Early release of super due to financial hardship

If you're experiencing severe financial hardship, you may be allowed to access some of your super funds earlier than usual. Eligible applicants could be approved to withdraw up to $10,000 from their superannuation account.

To be eligible, you’ll need to:

• currently (and for the last 26 consecutive weeks) be receiving an income support payment from Centrelink or the Department of Veteran's Affairs (DVA)
• be unable to pay your immediate living expenses
• have substantial evidence of your debts or unpayable expenses.

The application process may differ between super funds. If you’re applying with NGS, you’ll need to complete our Early release of superannuation benefits on grounds of severe financial hardship form.

When applying, you’ll need to provide:

• your Centrelink customer reference number (CRN)
• certified proof of your identity (ID)
• proof of your current weekly income and expenses — no more than one month old — relating to yourself, your partner and your dependants
• proof of outstanding debts, like copies of overdue notices or bills no more than one month old
• a signed statutory declaration
• an explanation of how your current circumstances are impacted due to severe financial hardship.

Bear in mind that the funds taken out of your super early are paid and taxed as a normal super lump sum payout. You'll be generally taxed at a rate depending on your age, income, and the components of your super lump sum.

Early release of super on compassionate grounds

Compassionate grounds is another way to access your super early.

This option is designed to help pay for:

• medical treatment and transport for you or a dependant
• a home loan or council rate payment so you don’t lose your home
• modification in your home or vehicle to accommodate you or your dependant's severe disability
• palliative care for you or a dependant with a terminal medical condition
• a funeral for or burial of a dependant.

Unlike severe financial hardship payments, the release of super on compassionate grounds is processed by the Australian Taxation Office (ATO), and applications can be submitted through myGov or via a paper form on request.

To gain early access to your super through compassionate grounds, there are a few conditions outlined by the ATO that you need to meet.

You must:

• not have paid for your expenses yet (you can't access your super early to offset what you've already spent)
• be unable to afford part or all of the expense without accessing your super (i.e. you're not in a position to get a loan, use your savings, or sell your assets)
• be a citizen or permanent resident of Australia or New Zealand
• provide all the required supporting evidence of your unpaid expense (e.g. invoices and quotes detailing specific bills and family living expenses).

In some cases, you can also access your super early to pay for your dependant's expenses. For early access on compassionate grounds, a person is considered your dependant if they are your spouse, child, a person you are in an interdependent relationship with, or a person who is financially dependent on you.

The ATO has clear limitations for those wanting to access super early under compassionate grounds. You can find conditions for medical treatment and transport, disability, and home sale prevention outlined on the ATO website.

Early super access under compassionate grounds applies only for any unpaid expenses you may have. And, unlike early access under financial hardship, applying through compassionate grounds means you can only withdraw an amount deemed appropriate by the ATO to meet your unpaid expenses.

Note that there are different regulations surrounding early access to super between the states and territories. A Super Specialist may help you determine how you can gain early access to your super based on your location.

First home super saver scheme

The first home super saver (FHSS) scheme allows you to make and later withdraw concessional (before-tax) and non-concessional (after-tax) contributions into your super to help you purchase your first home.

Under this scheme, you can release part of the funds in your super to pay for your first home, even if you are under preservation age. If you're successful in applying for the FHSS scheme, you can release a maximum of $15,000 of your voluntary super contributions from any one financial year or up to $30,000 in contributions across all years.

From 1 July 2022, the maximum across all years will increase to $50,000, meaning couples can potentially access up to $100,000 for the purchase of their first home.

Note that to apply for early release of your funds under the FHSS scheme, you will need to live in the property you buy (or intend to) for at least 6 of the first 12 months you own it.

For more detail on how the scheme works, visit our FHSS scheme page.