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Can you access your super early?

Can I access my super?

So you’re having a tough time – you can’t pay your bills or the mortgage is in arrears and you have no savings other than your superannuation. How do you go about getting access to super to help you out of a bind?

It might be harder than you think.

In the 10 months from July 1, 2014, to April 30, 2015, the Department of Human Services (DHS) received 16,091 applications for the early release of super. Only 11,736 were approved in full or in part and the average amount released for each approval was $12,604.

Using your super can certainly ease the burden of trying to pay off debts and you won’t have to worry about getting another loan.

The risk, though, is that it will be just a temporary reprieve.

Money Help says some of the consequences of early release of super funds include the fact that unless you can settle all your debts, you may pay your creditors and still lose your home.

It also warns that funds in super are protected from creditors but when released early they lose this protection. Of course, it will also mean less super available to you in retirement.

You may be able to access super early for a number of reasons.

One is compassionate grounds, which includes paying for medical or dental treatment, for you or a dependant; making a mortgage payment to avoid your home being lost; modifying your home or vehicle to accommodate special needs due to a severe disability; or paying for expenses associated with a dependant’s death, funeral or burial.

If you’re applying for any of these reasons, you need to go through the DHS’s online myGov service.

You will need to confirm your identity and supply supporting documents. If more than one specified compassionate ground applies to you, you need to complete an individual application for each one. The amount you can withdraw is limited to what the DHS considers is “reasonably needed”.

You will pay tax on this as a normal lump sum. If you are unable to apply online you can call 1300 131 060. If the DHS approves your application, you will then have to go to your super fund.

You may also be eligible for early release due to “severe financial hardship”.

This means you have been receiving government income support payments continuously for 26 weeks and are unable to meet reasonable and immediate living expenses. You will need to apply through your super fund, explain your circumstances and provide proof from Centrelink.

The maximum you can get is $10,000 in any 12-month period. It will also be taxed.

You will also be able to access super early if you have been diagnosed with a terminal illness and have less than two years to live (it used to be 12 months or less).

You will need medical certificates stating your life expectancy and, in this case you need to apply directly to your super fund.

You will not have to pay any tax. If your fund does not allow access for a terminal condition, the tax office says you may be able to move your super to a different fund that does and then apply for early access through that fund.

Something to be aware of is that early release of super may affect benefits you or your partner receive, such as family tax benefit, childcare benefit or an income support payment.

Also ask your fund if it charges a fee to withdraw super early.

Written by Maria Bekiaris

Maria Bekiaris

Deputy editor Maria Bekiaris joined Money in 2001 as a writer/researcher. She writes about personal finance and investing, and has contributed to Australian House & Garden, Good Health, and Mother & Baby.

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