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  • Access due to temporary or permanent incapacity

    You may be able to access your super early due to temporary or permanent incapacity.

    Temporary incapacity

    You may be able to access your super if you are temporarily unable to work or need to work less hours because of a physical or mental medical condition. This condition of release is generally used to release insurance benefits from a super provider.

    You will receive the super in regular payments (income stream) over the time you are unable to work. A super withdrawal due to temporary incapacity is taxed as a super income stream.

    How to apply

    Contact your super provider to request access to your super due to temporary incapacity and to ask about insurance implications attached to your account.

    How tax applies

    There are no special tax rates for a super withdrawal due to temporary incapacity.

    See also:

    Permanent incapacity

    You may be able to access your super if you are permanently incapacitated. This type of super withdrawal is sometimes called a 'disability super benefit'.

    You have a permanent incapacity if the trustee is satisfied that you have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do by education, training or experience.

    At least two medical practitioners must certify this for you to receive concessional tax treatment.

    You can receive the super as either a lump sum or as regular payments (income stream).

    How to apply

    Contact your provider to request access to your super because you have a permanent incapacity.

    How tax applies

    To work out how your super payment will be taxed you need to know how much of the money in your super account is a:

    • tax-free component
    • taxable component the super provider has paid tax on (taxed element)
    • taxable component the super provider has not paid tax on (untaxed element).

    If you're under your preservation age and receive a disability super benefit as an income stream, you will get tax offsets that reduce your tax rate by 15% on the taxed element of the taxable component you get.

    If you have reached your preservation age or if you get a lump sum, your disability benefit will be taxed at the rates described in How tax applies to your super.

    Find out about:

    Example

    Jenny is 45 years old and has a permanent incapacity. She receives an income stream from her super as an annual payment.

    On 29 August 2014, she receives $30,000. Her fund tells her it is entirely taxable component that was taxed in the fund.

    Jenny includes the $30,000 as assessable income on her tax return. She claims tax offsets that result in her paying the following effective rates of tax:

    Effective tax rate paid by Jenny

    Type of super

    Effective tax rate (including Medicare levy)

    Taxable component – taxed element: $30,000

    Her marginal tax rate less 15% tax offset

     

    End of example
      Last modified: 29 Aug 2019QC 60034