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Conditions of release

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

Last updated 9 October 2023

About conditions of release

To pay benefits, a member must satisfy one of the conditions of release. As a trustee, you must:

  • ensure the member has met a condition of release before you release any funds
  • check that the governing rules of your fund allow it.

If the member has met a condition of release, make sure you keep records and proof that show they have met all the requirements. Your auditor will need to make sure you haven't illegally released any benefits.

It's possible that a benefit may be payable under the super laws, but not under the rules of your SMSF.

Some conditions of release restrict the:

  • form of the benefit – for example, lump sum or pension
  • amount of benefit that can be paid.

These are known as 'cashing restrictions'.


Media: SMSF - Retirement and conditions of release Link (Duration: 02:12)

Common conditions of release

The most common conditions of release are that the member:

  • has reached their preservation age and retires
  • has reached their preservation age and begins a transition-to-retirement income stream
  • ceases an employment arrangement on or after the age of 60
  • is 65 years old (even if they haven't retired)
  • has died.

Special circumstances

In certain circumstances, where a member meets the eligibility requirements, they may have at least part of their super benefits released before they reach preservation age. These circumstances include if they:

  • have terminated gainful employment
  • are temporarily or permanently incapacitated
  • have suffered severe financial hardship
  • meet conditions for compassionate grounds
  • have a terminal medical condition
  • are taking part in the first home super saver scheme.

Benefits could previously be released as part of the COVID-19 early release of super program. This program closed on 31 December 2020.

Generally, rollovers to other super funds don’t require the member to satisfy a condition of release, subject to the governing rules of your SMSF.

Unrestricted non-preserved benefits

Unrestricted non-preserved benefits don't require a condition of release to be met and may be paid at any time. They include, for example, benefits for which a member has previously satisfied a condition of release and decided to keep the money in the super fund. Certain employer termination payments (ETPs) received by the fund before 1 July 2004 may also be included in this category of benefits.


Media: SMSF - Loans and early access Link (Duration: 02:02)

Illegal early release of super

Releasing benefits to members who have not met a condition of release is illegal. If you do this, you are liable for administrative penalties in your capacity as a trustee.

The withdrawn amount will be included in the member's assessable income, even if they pay it back later. This means they may pay:

  • additional income tax
  • tax shortfall penalties
  • interest.

Both the trustee who released the super and the member who accessed it may also be disqualified as trustees of the SMSF. If disqualified:

This means your disqualification will be on public record. This can have an adverse impact on you professionally, personally or financially.

If you illegally access your super or have been involved in a scheme promoting illegal early access to your super, contact us immediately. When we determine penalties, we will take your circumstances and voluntary disclosure into account.

See more about illegal early release of super and TA 2009/1 Superannuation illegal early release arrangements.

Retirement under super laws

If the member is:

  • under 60 years old – they can access their preserved benefits only when they  
  • at least 60 years old – they can access their preserved benefits when they retire.

For retirement, there are no restrictions on the form in which the benefits can be taken.

Transition to retirement (TRIS)

An SMSF can pay a transition to retirement income stream to a member who has reached preservation age and is still working, provided the trust deed of the fund allows this type of income stream to be paid.

A transition to retirement income stream must be an account-based pension. The amount paid to the recipient each year must meet a specified minimum and must not exceed 10% of the account balance on the commencement of a TRIS for the year it starts or on 1 July for each subsequent year. For frequently asked questions, see SMSFs: Minimum pension payment requirements.

The transition to retirement measure can be complex. It's best to get advice from a financial adviser, accountant or tax professional.

Ceasing an employment arrangement on or after 60

If a member who is 60 years old or over gives up one employment arrangement but continues in another employment relationship, they may:

  • cash all benefits accumulated up to that time
  • not cash any preserved or restricted non-preserved benefits accumulated after that condition of release occurs – these benefits can't be cashed until a fresh condition of release occurs.

Turning 65

A member who has reached 65 years old may cash their benefits at any time. There are no cashing restrictions, which mean the benefits can be paid as an income stream or a lump sum.

A fund member is not compelled to draw down their super once they reach a particular age. They can keep their benefits in the fund indefinitely. The only time it is compulsory for an SMSF to pay out a member’s benefit is when a member dies.

Early release of super

Only in very limited circumstances can super be accessed early. These are mostly related to specific expenses.

Terminating gainful employment

Subject to the governing rules of your fund, where a member (who has not met another condition of release) has ceased employment with an employer who had contributed to the member's fund, on termination:

  • All preserved benefits may be paid, but they must be taken as a lifetime pension or annuity, which can't be commuted into a lump sum (unless the preserved benefits are less than $200, in which case the member can cash the benefits without restriction).
  • All unrestricted non-preserved benefits can be cashed out on request from the member (no cashing restrictions).

Permanent incapacity

A member's benefits may be released if they cease gainful employment and you're satisfied that the member is unlikely, because of ill health, to engage in gainful employment that they are reasonably qualified for by education, training or experience. There are no cashing restrictions on payment of benefits.

Temporary incapacity

A member's benefits may be paid if you're satisfied that the member has temporarily ceased work due to physical or mental ill health that does not constitute permanent incapacity. In general, temporary incapacity benefits may be paid only from the insured benefits or voluntary employer funded benefits.

It's not necessary for the member's employment to fully cease but, generally, a member would not be eligible for temporary incapacity benefits if they were receiving sick leave benefits. The benefit must be paid as an income stream for the period of the incapacity and can't be commuted to a lump sum.

Severe financial hardship

To release benefits under severe financial hardship you need to be satisfied that the member:

  • can't meet reasonable and immediate family living expenses
  • has been receiving relevant government income support payments for a continuous period of 26 weeks and was receiving that support at the time they applied to the trustees.

The payment must be a single gross lump sum of no more than $10,000 and no less than $1,000 (or a lesser amount if the member's benefits are less than $1,000). Only one payment is permitted in any 12–month period.

Alternatively, if the member has reached their preservation age, you need to be satisfied that the member:

  • has been receiving relevant government income support payments for a cumulative period of 39 weeks since reaching their preservation age
  • was not gainfully employed on a full-time or part-time basis at the time of applying to the trustees.

If you release benefits under these circumstances, there are no cashing restrictions.

Compassionate grounds

For benefits to be released on compassionate grounds, a member must meet certain criteria and receive ATO approval prior to the trustee releasing any funds (see Early access to your super). Circumstances the member must meet to qualify are where:

  • a member does not have the financial capacity to meet an expense to pay for  
    • medical treatment and medical transport for you or your dependant
    • palliative care for you or your dependant
    • making a payment on a home loan or council rates so you don’t lose your home
    • accommodating a disability for you or your dependant
    • expenses associated with the death, funeral, or burial of your dependant
  • the member has not yet paid the expense
  • the member is or has been a citizen or permanent resident of Australia or New Zealand
  • release is allowable under the governing rules of your fund.

The amount of super that you can pay on compassionate grounds is limited to what is reasonably needed. It is paid as a lump sum.

Terminal medical condition

If a member has a terminal medical condition and 2 medical professionals certify that the condition is likely to result in the member’s death in the next 24 months, the balance of their super account may be paid as a tax-free lump sum benefit. There are no cashing restrictions, see Access to super for members with a terminal medical condition.

First home super saver scheme

The first home super saver (FHSS) scheme allows your fund members to save for their first home inside their super. Your members can do this by making voluntary concessional and non-concessional contributions to their super. When your members are ready to receive their FHSS amounts, they can request a release from us to withdraw personal contributions they have made into super since 1 July 2017, along with associated earnings.

If your member's request to release a FHSS amount is successful, we will issue you with a release authority letter showing the amount you are required to send to us. We will also send you a release authority statement form, which you will need to complete (which must be completed in all cases, including partial releases or where you are unable to release any amounts). You are required to comply with this release authority within 10 business days of the date on the letter.

Even if your member has not made voluntary contributions to your fund, the FHSS amount can still be released from their account subject to the applicable cashing order of benefit rules. Once you have sent any FHSS release amounts to us, we will withhold the appropriate amount of tax, and in some cases offset the remaining amount against any outstanding Commonwealth debts. We will then pay the balance of the FHSS release amount to your member.

COVID-19 early release of super

The COVID-19 early release of super program closed on 31 December 2020; applications can no longer be accepted.

Eligible individuals were able to access up to $10,000 of their super between 19 April 2020 and 30 June 2020 and then a further $10,000 between 1 July and 31 December 2020 to help deal with the adverse economic effects of COVID-19.

If you withdrew money from your super fund through the COVID-19 early release of super program, you can re-contribute COVID-19 early release super amounts.