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SMSF Setup SMSF Transfer

Condition of Release

Unrestricted non-preserved component of your member benefits in your SMSF can be accessed without any condition of release. You can check your unrestricted non-preserved benefits in your member statements prepared by iCare Super.

To access other member benefits, you must satisfy one of the condition of release. The typical condition of release for particular SMSF member is listed as below:

  1. has reached preservation age and fully retired, or
  2. has reached preservation age and set up a transition to retirement pension, or
  3. has attained the age of 60 and ceased one employment arrangement, or
  4. has reached 65 years old, or
  5. has passed away.

There are certain exceptions that permit early access to superannuation. These are considered special conditions of release:

1. Severe Financial Hardship

Eligibility requires:

  • Inability to meet reasonable and immediate living expenses.

  • Continuous receipt of government income support payments for at least 26 weeks.

You can apply for one payment between $1,000 and $10,000 per 12-month period. If you’ve reached your preservation age plus 39 weeks and remain unemployed, you may access your super without the $10,000 cap.

2. Compassionate Grounds

Early super release is allowed for urgent or life-impacting expenses such as:

  • Medical treatment or transport for a serious illness.

  • Palliative care for terminal illness (for yourself or a dependant).

  • Home or car modifications due to severe disability.

  • Funeral or burial costs for a dependant.

  • Avoiding foreclosure or forced sale of your primary residence.

How to Apply:

  • Submit your application through the ATO website.

  • Provide necessary documents such as medical reports or overdue notices.

  • Withdrawals are taxed as standard super lump sums and must be reported in your tax return.

3. Permanent Incapacity (Disability Super Benefit)

If a permanent mental or physical condition prevents you from ever returning to suitable work:

  • You may access your super as a lump sum or income stream.

  • Eligibility must be verified by two qualified medical professionals.

  • Even if you’re doing light or unrelated duties, you may still qualify.

  • Taxation depends on how much of your super is classified as tax-free or taxable (taxed/untaxed components).

  • If you’re under preservation age, you may be eligible for a 15% tax offset on income stream payments.

Contact your super fund for eligibility assessment and to begin the process.

4. Temporary Incapacity

Temporary medical conditions (e.g., injury or illness) may allow you to receive super payments—usually funded through employer-paid insurance within the fund. These are income streams only, not lump sums.

5. Terminal Medical Condition

If two registered medical practitioners certify that you are likely to pass away within 24 months:

  • You can access your entire super balance tax-free.

  • One of the medical practitioners must be a specialist in your condition.

  • Funds can be withdrawn as a lump sum or income stream.

6. Super Balance Under $200

You can apply for early release if:

  • Your job is terminated and your super balance is under $200, or

  • You’ve located a lost super account with a balance under $200.

These withdrawals are tax-free. Contact your fund directly to begin the withdrawal process or check your ATO-held super accounts for eligibility.

7. First Home Super Saver Scheme (FHSS)

Designed to help first-home buyers, this scheme allows you to withdraw voluntary super contributions (made after 1 July 2017) to use as a home deposit.

  • You must apply through the ATO to receive a release authority.

  • The funds will be taxed upon release, but at a concessional rate

Warning: Illegal Early Access to Super

Accessing super without meeting an eligible condition of release is unlawful. Such withdrawals are taxed at your marginal rate and may incur hefty penalties for both the member and the fund trustee. Always consult your fund or a licensed financial adviser before attempting to access your super early.

Whether you’re preparing for retirement or facing exceptional circumstances, knowing the legitimate pathways to access your superannuation is essential. We strongly recommend consulting with your SMSF administrators , such as iCare Super, and ensure the condition of release has been met.

 

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