Early release of super explained04 May 2022 5 min read
While your super is designed to fund your retirement, in some cases, you may be able to access your super early. Here, we explore 3 ways you can access your super before you retire:
- on grounds of severe financial hardship
- on compassionate grounds
- through the first home super saver (FHSS) scheme.
Though they’re no longer available, we’ll also touch on COVID-19 early release payments, and how — if you’d like to — you can re-contribute these funds to your super.
Severe financial hardship and early release of super
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 and 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 why you’re in 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 taxed at a rate depending on your age, income, and the components of your super lump sum.
Early access to super under 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 for you or your dependant’s disability
- palliative care for you or a dependant
- a funeral for or burial of a dependant.
Unlike severe financial hardship payments, 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).
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 early release of super 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 with your super fund, 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 of super between the states and territories. A financial planner 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 release 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.
COVID-19 and super
During the initial stages of the COVID-19 pandemic, the ATO enabled early release of super for those suffering financial struggles. However, the ATO is no longer accepting such applications.
The government is now offering a super re-contribution scheme to help Australians rebuild their retirement funds after COVID-19. The scheme exempts your contributions from your annual after-tax contributions cap, meaning you can return the funds you took out without impacting your contribution limits. The re-contribution scheme is available from 1 July 2021 to 30 June 2030.
To apply to re-contribute COVID-19 early release payments, you’ll need to fill out and lodge the ATO’s approved form. You can only re-contribute funds equal to or less than the amount originally released under the COVID-19 early release of super program. Importantly, you won’t be able to claim a deduction on your income tax return for your re-contributed amount.
Frequently asked questions
How do I get an early release of my super?
Your ability to access super before retirement will depend on your circumstances. You can apply to get an early release of your super either with your super fund (under severe financial hardship or the first home super saver scheme) or directly with the ATO (under compassionate grounds).
For each method, you’ll need to meet the eligibility requirements and be able to provide all the necessary supporting documents for your claim.
If you’re not sure if you’re eligible, you can chat with our Helpline to explore your options by calling 1300 133 177, Monday to Friday, 8am–8pm (AEST/AEDT).
Can I still access my super due to COVID?
No. The COVID-19 early release of super program closed on 31 December 2020 and applications are no longer accepted.
However, if you withdrew from your super during this time and are in a position to rebuild your super funds, you can apply for ATO’s super re-contribution scheme. Under this scheme, your contributions will be exempt from your annual after-tax contributions cap.
Get in touch with the NGS Super team for more information on super re-contributions and how you can apply.