Super is a long-term investment designed to support you in retirement. Because of this, there are strict rules on when you can access your super.
While you normally can’t access your super until you reach your preservation age and retire, you may be able to access some of your super earlier on compassionate grounds if you have applied for and received approval from the Australian Taxation Office (ATO).
This is where you have no means of paying for unpaid expenses such as:
More information is available on the ATO website.
Before you come to Mercy Super to access part of your super early on compassionate grounds you first need to have applied for and received approval from the ATO.
You can initiate the application process online through the ATO online services section of your myGov account.
Lump sum withdrawals from your Super Account are taxed as super lump sum payments.
If you are age 60 or over, then any withdrawals from your Income Account are tax free.
If you are under age 60, these payments are generally divided into tax-free and taxable components and are taxed according to your age as shown in the table below. The tax-free and taxable components are calculated using complex rules, but in general, the components depend on the source of the original contribution and the nature of the payment being made.
The tax on the taxable component of retirement lump sum payments is as follows:
|You are…||Your taxable component is…||Your tax-free component is…|
|Less than preservation age||Taxed at 20% (plus Medicare levy)||Tax-free|
|Preservation age to age 59||The first $225,000 (2021/22)* is tax free. You pay tax at 15% on the balance (plus Medicare levy)||Tax-free|
|Age 60 and over||Tax-free||Tax-free|
*This cap is indexed, but only when indexation produces an increase of $5,000 or more.
Once you’ve received approval for payment from the ATO, you’ll need to complete the Early release application – compassionate grounds form and provide it along with any other associated documents. This includes:
If you have any questions or need assistance in completing the application or exploring options to get your finances back on track – just get in touch.