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Paying benefits

Work out if you can pay a super benefit to a member and the types of benefits that exist.

Last updated 9 October 2023

Before paying benefits

Generally before you pay a member's super benefits, you need to ensure the:

Benefit payments to members who have not met a condition of release are not treated as super benefits. Instead, they will be taxed as ordinary income at the member's marginal tax rate. This is also known as illegal early release of super.

If a benefit is unlawfully released, we may apply significant penalties to:

  • you
  • your SMSF
  • the recipient of the early release.

In addition we may disqualify the trustees involved. This is published in the Federal Register of LegislationExternal Link as a notifiable instrument.

Operating standards, investment restrictions and other rules and regulations that apply to SMSFs in the accumulation or growth phase, continue to apply when members begin receiving a pension from the SMSF.

Types of payments

Where your member has met a condition of release, you can either pay the benefit as a lump sum or super income stream.

If a member has died, you will generally pay a death benefit to their dependant or other beneficiary of the deceased. There are additional rules to consider.

You should also consider if the income stream is an innovative retirement income stream which covers a range of lifetime products.

Most of the super held in your fund will be in the form of preserved benefits.

SMSF can pay benefits as a lump sum, a pension or a combination if the payment is under the laws and the trust deed.

What are the conditions of release a member must satisfy to receive self-managed super fund (SMSF) benefits.

When an SMSF member dies, the SMSF generally pays a death benefit to a dependant or other beneficiary of the deceased.