Understanding Your Options for Early Super Access During Financial Hardship
If you’re facing severe financial hardship, accessing your superannuation early may provide some relief. However, strict eligibility criteria apply, and the decision ultimately rests with your super fund.
Who Decides?
If you need to access your super before turning 65 due to financial hardship, your super fund—not the Australian Taxation Office (ATO)—will assess your application. However, Services Australia may play a role by verifying your receipt of income support payments, if required by your fund.
Eligibility for Early Access
To qualify for early access due to severe financial hardship, your super fund will apply one of two tests. The test used depends on whether you have reached your “preservation age” plus an additional 39 weeks.
Your preservation age varies depending on your birth year, but for most Australians, it is 60. For simplicity, let’s refer to the threshold for financial hardship access as 60 years and 10 months, though you should confirm the exact timing with your super fund.
If You Are Younger Than 60 Years and 10 Months
To be eligible, you must:
- Be receiving income support payments from Centrelink or the Department of Veterans’ Affairs at the time of your application.
- Have received these payments for at least 26 consecutive weeks.
- Demonstrate that you are unable to meet reasonable and immediate family living expenses.
Common income support payments that qualify include JobSeeker Payment and Disability Support Pension. However, payments like Youth Allowance (for full-time students), Austudy, and Family Tax Benefit do not count.
Additionally, you cannot have accessed your super due to financial hardship within the past 12 months.
If your application is approved, you can withdraw between $1,000 and $10,000. If your super balance is below $1,000, you may withdraw the remaining amount after tax is deducted.
If You Are 60 Years and 10 Months or Older
If you have reached this age and have received income support payments for at least 26 weeks, you do not need to prove financial hardship—your eligibility is automatically based on your income support status.
Tax Implications
Super withdrawals due to financial hardship are taxed at 22% if you are under 60 years old. However, if you are 60 or older, your withdrawal is generally tax-free.
Next Steps
If you’re experiencing financial hardship, contact your super fund to discuss your options. They can guide you through the application process and help you determine the best course of action.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.