What are the superannuation withdrawal rules?

Your superannuation savings can only be accessed if you have met a condition of release, such as retirement. Once met, you will be able to choose to take your money as a lump sum or roll it over to start an income stream.

What should be considered before making a withdrawal?

If you plan to withdraw money from your superannuation you should be aware that you will need to meet a condition of release, and that in some situations, the withdrawal may be taxed. 

What are the conditions of release?

You cannot access your superannuation until you have satisfied a condition of release. The withdrawal request needs to be in writing to the superannuation trustee and may need to be supported by a statement or evidence that you have satisfied a condition of release. Some common conditions of release are discussed below. Your adviser can help you with other conditions of release that may be relevant to you.

Reaching age 65

You can fully access your superannuation once you reach age 65 even if you are still working. 


If you have reached your preservation age and permanently retire (ie do not intend to work again for more than 10 hours in any week) you will meet a condition of release. Preservation age is gradually increasing as shown

If you stop a job after you reach age 60 you will meet the retirement definition to access your superannuation even if you intend to keep working in another job. 

Permanent incapacity

If you suffer an illness or injury and become permanently incapacitated you may be able to access your superannuation. This will require assessment by your superannuation fund trustee to determine if the superannuation legislative requirements are met and will require medical evidence that you are permanently unable to work in any occupation for which you are experienced or qualified to perform.

Terminal medical condition

If you have a terminal medical condition you may be able to access your entire super benefits, regardless of your age. A terminal medical condition exists if: 

  • Two registered medical practitioner have certified that you suffer from an illness that is likely to see you not surviving a period of 24 months from the date of the certificate. 
  • At least one of the registered medical practitioners is a specialist practicing in an area relates to the illness or injury suffered by you.

Severe financial hardship

You will be able to withdraw some of your super if you received a Centrelink income support payment continuously for 26 weeks, and unable to meet reasonable and immediate family living expenses.

Compassionate grounds

If you do not have the financial capacity to meet certain expenses you may be able to apply to access some of your superannuation benefits to pay for those expenses. 

Compassionate grounds include:

  • Medical treatment and medical transfer for you or a
  • dependant.
  • Palliative care for you or a dependant.
  • Making a payment on a mortgage to prevent foreclosure of
  • your home.
  • Modifying your home or vehicle, or buying disability aids
  • for you or a dependant because of a severe disability.
  • Expenses associated with a death, funeral or burial of
  • a dependant.

You’ll need to apply to the ATO with supporting documentation for approval and the amount that can be released is limited to what you reasonably need. 

What are the superannuation components?

The money in your superannuation fund is comprised of the following components:

  • tax-free component
  • taxable component – element taxed
  • taxable component – element untaxed

The components depend on the underlying source of the funds. Personal contributions for which you have not claimed a tax deduction will be included in the tax-free component. This also includes spouse contributions, the government co-contribution, downsizer contributions and amounts contributed under small business CGT rules. 

Employer contributions, personal deductible contributions, insurance payouts and earnings generated within the fund are all included in the taxable component. An untaxed element is included if the fund is an unfunded scheme (ie contributions tax was not deducted) or you have received an insurance payout. 

Each withdrawal you make is split proportionally across the components. The tax-free component is withdrawn with no tax payable. However, lump sum tax is payable on the taxable components.

What other tax implications may apply?

If you withdraw a taxable component and tax is paid on this amount, it is added to your assessable income. This may impact your entitlement to other tax offsets or benefits. This may mean you pay more tax than you expect on other income in that year. 

i Definition of “preservation age” in SIS Regulation 6.01

ii ATO website: Super lump sum tax table

iii ATO website: Untaxed plan cap amount

iv ATO website: Low rate cap amount

This information has been produced by Australian Unity Personal Financial Services Ltd (‘AUPFS’) ABN 26 098 725 145, AFSL 234459. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. Case studies are included for illustrative purposes only, are based upon hypothetical scenarios, and no inference as to the suitability of a particular strategy to any particular person or entity should be made. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in this document is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing in this document represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness. Published: July 2020 © Copyright 2020