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  • Conditions of release

    To pay benefits, a member must satisfy one of the conditions of release.

    Some conditions of release restrict the form of the benefit (for example, lump sum or pension) or the amount of benefit that can be paid. These are known as 'cashing restrictions'.


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

    As a trustee, you must ensure the member has met a condition of release before you release any funds, and check that the governing rules of your fund allow it.

    It's possible that a benefit may be payable under the super laws, but not under the rules of your self-managed super fund (SMSF).

    The most common conditions of release for paying benefits are that the member:

    In special circumstances, at least part of a member’s super benefits can be released before the member has reached preservation age. These are:

    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.

    Payments of benefits 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. Significant penalties may also apply to you as trustee and to your fund.

    Unrestricted non-preserved benefits are benefits that 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)

    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 leave a job.

    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 information on 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.

    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 cashed 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 plus 39 weeks, 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

    Benefits may be released on specified compassionate grounds (see, Early access to your super) if all the following conditions are met:

    • a member does not have the financial capacity to meet an expense
    • 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.

    Improper early access to your super is illegal. There are severe consequences for you and your fund if you access your super before you are legally entitled to do so. These include:

    • disqualification of trustees
    • the fund being made non-complying
    • imposition of administrative penalties
    • prosecution.

    Any money accessed illegally will also be included in the assessable income of the individual and taxed at the applicable marginal tax rate.

    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 superannuation amounts.

    Last modified: 26 Jul 2022QC 23338