I’m sorry to read about your circumstances. SuperGuide is an information site rather than an advisory site so I am unable to advise you on your best option. What I can do however is provide you with some information and pointers for seeking further assistance.

Who can help you?

The following services or professionals may be able to assist you with your decision:

• Financial Information Service. A free government-funded service run under the banner of Centrelink, but you don’t have to be in receipt of a Centrelink benefit to use this service. (click here for more information or telephone on 13 23 00)
• Financial Counselling. You can access free financial counselling to help you manage your day-to-day finances from a financial counsellor. The Australian Securities and Investments Commission (ASIC) has a list of the main services across the country. Click here to access the list. http://www.fido.gov.au/fido/fido.nsf/byheadline/Financial+counselling
• Retirement advice from an accountant or fee-based financial adviser. Although a full-blown financial or retirement plan can add up to thousands of dollars, I’d expect any adviser providing preliminary advice on your circumstances would charge no more than a few hundred dollars. If you’re fortunate, some advisers may provide you with a preliminary view for no charge, but that would be unusual.

If you retire, what are the implications?

If you do retire before the age of 60, you’re likely to have to pay some tax on your super benefits. If you retire on or after the age of 60, then you can expect to receive all of your super benefits tax-free (unless you’re a member of one of the older public sector funds). For more information on the tax implications of retiring check out the following articles:

• I’m 59 and I have $180,000 in super. Will my super be taxed?
• Retiring before the age of 60: the tax deal
• Retirement: Taking benefits before the age of 60
• Tax-free super for over-60s

Note: In some circumstances, an individual who retires may, at a later stage, reconsider his or her circumstances and decide to return to work. I explain this possibility in the article Super for beginners, Part 9: If I retire and take my super, can I return to work?

If you retire, your super fund will require you to complete a form that provides evidence of your intention to retire, and proof of your identity.

Note: If you’re suffering mortgage stress, you may be eligible to access some of your super benefits on compassionate grounds which may enable you to reduce debt without retiring, although the access rules are strict. I explain the rules in the article Super for beginners, part 10: Can I use my super to reduce my mortgage?

Related posts:

1. Accessing super early: Not for business debts
2. Super for beginners, Part 9: If I retire and take my super, can I return to work?
3. Retiring before the age of 60: the tax deal

I’m sorry to read about your troubles. Generally speaking, the super rules don’t permit access to super benefits to pay business debts. I have written about this issue in the article No super access for business debts or tax bills.

Note that if an individual is unable to pay a mortgage, and the bank is planning to foreclose, then the individual may be able to access super benefits on compassionate grounds. I also explain this option in the above article. If the Australian Prudential Regulation Authority does permit access to your super benefits, then note that some tax may be payable on the super benefit.

Retirement: Based on my calculations, your age is 57. What this means is that you have reached your preservation age (anyone born before July 1960 has a preservation age of 55). If an individual has reached preservation age and chooses to retire, then such an individual satisfies a condition of release and can access super benefits. Retiring obviously is not an option based on the details of your question.

TRIP: Another alternative for an individual who has reached preservation age is to start a transition-to-retirement-pension (TRIP) which permits you to access up to 10% of a person’s super benefit each year as pension income. Again, after allowing for the costs of setting up a TRIP, the maximum amount that can be withdrawn is probably a drop in the ocean when considering the circumstances that you’re facing.

Note: Generally speaking, superannuation benefits are protected from creditors in the event of a business collapse. The one major exception is where fund members make substantial contributions when a business collapse or bankruptcy is imminent. For more information on this type of scenario, I recommend that you chat to your business adviser.

Related posts:

1. No super access for business debts or tax bills
2. Accessing super early: Living overseas and over the age of 55
3. Accessing super to buy property: part one

A super fund can release super benefits to a member if they have a terminal medical condition. According to the legislation, a terminal medical condition exists if two registered medical practitioners have certified jointly or separately, that the member suffers from an illness, or has incurred an injury that is likely to result in the member’s death within 12 months of the date of certification. For each of these certificates, the certification period must not have ended. Further, at least one of the registered medical practitioners must be a specialist practicing in an area related to the illness or injury.

Note: Early access due to terminal illness is available from any super fund, including a self-managed super fund.

If a member of a SMSF is facing such an unfortunate circumstance then the appropriate certification must be produced before the super monies can be released. The ATO recommends that before making such a payment from a SMSF, that you check if your fund member has any other super accounts in existence and arrange the transfer of those benefits into the member’s account before making a payment under this condition of release.

Note: Alternatively, you can apply to the Australian Prudential Regulation Authority to access your super on compassionate grounds if you need the cash “to provide care for yourself or your dependant if you or your dependant is dying from a terminal medical condition. This kind of care is often referred to as ‘palliative care’.” Here is a link to more information on the compassionate grounds for early release.

Related posts:

1. Accessing super early: Serious illness or surgery
2. Accessing super early: 12 popular Q and As
3. Accessing super early: Permanent departure from Australia

Trish’s response: I need to divide your question into four parts: making super contributions, accessing super benefits, running an income stream and tax management strategies.

Before I do provide an answer, I must point out that this site does not give financial advice or tax advice. We are an information site which means any response that I give is a general response for the benefit of all visitors to our site, rather than a response that you can rely on as personal advice. In short, I will be explain the contribution rules for over-65s, when Australians can access super benefits, the rules that apply when a super account is in pension phase and the tax management strategy that you mention in your question.

Making super contributions

Anyone aged 65 or over, must satisfy a work test before making super contributions. The work test involves working 40 hours in any 30-day period in the financial year in which you plan to contribute. You must be paid for that work.

Note: Anyone under the age of 65 can make super contributions without satisfying a work test.

You can make two types of contributions – concessional and non-concessional. Concessional (before-tax) contributions are subject to a 15% contributions tax upon entry to the super account, while non-concessional (after-tax) contributions are not subject to this super tax upon entry into the super fund. I explain the contribution rules for over-65s in more detail and related articles on the general contribution rules in the following articles:

• 65 and over: Making super contributions
• For over 65s: ten super tips when making super contributions

Note: Owners of small businesses may be eligible for special capital gains tax (CGT) concessions when planning for retirement (click here for the ATO link on the topic), including a special CGT cap when contributing business proceeds to super.

Accessing super benefits

You can access your benefits when you satisfy a condition of release. For most Australians, the condition of release that applies is reaching preservation age (at least age 55) and retiring.

Reaching the age of 65 is also a condition of release, which means that you don’t have to retire to access your super benefits on or after the age of 65.

An individual aged, say 63, would need to satisfy a condition of release, such as retiring or starting a transition-to-retirement pension (TRIP) to access preserved super benefits.

I explain the conditions of release in my article 12 legal reasons to cash your super. You can also visit the ‘accessing super’ section of this website for more articles on accessing super benefits.

Note: If you access your super benefits on or after the age of 60, your super benefits are free of tax (unless you’re a member of certain public sector funds known as ‘untaxed funds’). You can find more information on the tax treatment of super benefits in the ‘super & tax’ section of this site.

Running an income stream

You don’t have to be receiving a superannuation pension (also known as a superannuation income stream) to access your super benefits, but earnings on a super account are taxed differently depending on whether your super account is in pension phase or accumulation phase.

In simple terms, accumulation phase is when you haven’t started a pension/income stream. Any earnings on fund assets while in accumulation phase are subject to 15% earnings tax. When a super account in pension phase, any earnings on fund assets are exempt from tax. Starting a pension means tax-free fund earnings.

Note: Tax-free fund earnings are different from tax-free super benefits payable from a super fund. The difference is that fund earnings relate to the super fund, while super benefits relate to the individual receiving the benefits.

If an individual is under the age of 65 and hasn’t retired, and wants to access super benefits then a popular strategy is to start a transition-to retirement-pension (TRIP) which enables a working individual aged at least 55 years to access a maximum of 10% of their super account each year as pension payments. I explain the rules applicable to TRIPs in my article Starting a TRIP takes planning.

Tax management strategies

Many Australians use a super fund to save for retirement because the Government provides tax incentives to do so. The deal is that you get tax breaks for locking your money away until you retire. I provide a summary of how super is taxed in my article Four must-knows about super’s tax rules and in the ‘super and tax’ section on this website.

If you’re considering tax management strategies then the best person to talk to is a registered tax agent, typically an accountant. Any discussion in this article on tax matters is for illustrative purposes only.

The general rule is that if an individual is paying income tax of 15% or less on personal income, then saving via a super fund is not a tax-effective option. For the 2010/2011 year, anyone with a taxable income of less than $37,000 pays a maximum of 15% income tax, which means saving via a super fund is usually a tax-neutral option.

If you have reached Age Pension age, then you’re likely to be eligible for the Senior Australians Tax Offset (SATO) which means you may not pay any tax on your non-super income. SATO is not available if your income is significant. I explain SATO in my article No tax in retirement because you SATO.

So, the main message is: if your marginal rate of income tax is 15% or less, then superannuation may not offer any tax breaks. With every general rule however there are a few exceptions including the following:

1. Accessing co-contribution scheme. A co-contribution is a tax-free payment from the Government, paid directly into your super account. If your income is under a certain threshold, and you’re working, and you make a non-concessional (after-tax) contribution, then the Government makes a tax-free payment to your super fund. Receiving a 100% tax-free return on a $1,000 super contribution can be a very tax-effective decision. I explain the co-contribution in my article Cashing in on the co-contribution rules.
2. Taking benefits from super on or after age 60. Super benefits paid from a super fund on or after 60 are tax-free (except for benefits paid from some public sector funds) which means tax-free super income beats paying income tax.
3. Starting an income stream/pension. A super account in pension phase is not subject to earnings tax on the account’s earnings, so an individual aged 60 receiving a superannuation pension receives tax-free benefit payments, and the super fund pays no tax on its earnings. The super payments are not counted as ‘taxable income’ which means an individual could receive, say, $100,000 a year, from his super fund and still earn nil taxable income. Even when an individual starts a pension before the age of 60, tax offsets and how an individual structures their salary (if any) and pension payments can mean a lower tax bill than if they hadn’t used the super structure.

Note: Seek tax advice if you’re considering using a super fund as a means of minimising tax.

Related posts:

1. Super for beginners, part 17: Four must-knows about super’s tax rules
2. Super for beginners, part 16: Tax-free twice
3. Retirement: Taking benefits before the age of 60

Trish’s response: For the benefit of other readers, I will first explain the potential tax bill that you are referring to in your question.

Tax-free component is… tax-free

Background: Super benefits can be made up of two components: tax-free component and taxable component. The tax-free component is always tax-free irrespective of the age that you take your super benefits, and irrespective of whether you leave your benefits to dependants or non-dependants under the tax laws.

The taxable component of a benefit may be subject to tax depending on whether you take your benefit before or after the age of 60, or, in the event of your death, when you leave your benefits to a ‘non-dependant’ under the tax laws.

If an individual dies, and leaves super benefits to a non-dependant under the tax laws, such as an adult child, then tax is usually payable on the taxable component of any death benefit. I explain the ins and outs of this ‘death tax’ and the meaning of dependants and non-dependants in the articles Beware the dastardly death tax and Dear Dad: Tax for everything.

A strategy to minimise this ‘death’ tax when leaving super benefits to adult children is to boost the tax-free component of a benefit by making non-concessional (after-tax) contributions immediately before starting an income stream, which then boosts the tax-free component of the account balance.

You have two questions, and I will answer the most straightforward question first. The bring forward cap of $450,000 for non-concessional contributions (for 2010/2011 year) remains in place, and the Federal Government currently has no plans to reduce this limit. I explain how the $450,000 cap (available to under-65s) works in the article Your 2010/2011 guide to non-concessional (after-tax) contributions. In relation to changes to contribution caps, you may be thinking of the changes to the concessional (before-tax) contribution caps, but they took effect from July 2009 (see article Super concessional contributions: 2010/2011 survival guide).

Boosting the tax-free component

Your second question is: Can I still use the re-contribution strategy to boost my tax-free component?

Generally yes, assuming the individual has satisfied a condition of release that permits them to access super benefits, such as retiring, or reaching the age of 65, or starting a transition-to-retirement pension (TRIP) or turning 60 and ceasing an employment arrangement. (I explain the conditions of release in the article 12 legal reasons to cash your super.)

You need to satisfy a few other conditions when withdrawing cash that you then intend to re-contribute, which means anyone considering such a strategy should always check the procedure with their adviser, or SMSF provider, or find an SMSF expert for one-off advice.

Chasing a refund for a lifetime of contributions tax

Note: Another strategy generating a lot of interest with SMSF trustees worried about leaving a tax bill for their adult children, involves the anti-detriment provisions. An anti-detriment payment (now known as the ‘tax saving amount’) can deliver a refund of all contributions tax paid by the deceased member over the life of the benefit. The anti-detriment payment strategy is available when a death benefit is paid as a lump sum to a dependant. In this instance, the term ‘dependant’ relates to those dependants under the super laws (which also includes adult children).

A SMSF needs to have fund members still in accumulation phase upon the death of the member to take advantage of the tax deduction that the SMSF receives for making the anti-detriment payment, and also have reserves to pay out the refund of contributions tax. Clearly, this is a complex area of superannuation and tax law and qualified and independent advice is essential. I also briefly explain the anti-detriment provisions in the article How can a SMSF live forever?.

Depending on the specific circumstances, an adviser may recommend that a SMSF use a combination of the two strategies, or only one of the strategies depending on whether the recipients of the death benefit will be paying a ‘death’ tax. Alternatively, a SMSF adviser may decide the cost and effort of using such strategies may not justify the tax benefits.

Related posts:

1. Estate planning: Dear Dad, Tax for everything
2. SMSF pensions: You stick with the original components
3. Estate planning: Beware the dastardly death tax

This answer assumes that your super benefits are preserved, and the answer to your question depends on your date of birth. Under normal circumstances, access to superannuation benefits requires certain conditions including:

• Reaching preservation age, and
• Retiring.

Note: If your super benefits include any non-preserved benefits, then different rules apply. I explain how you can access non-preserved benefits in the article Unrestricted access to super, sometimes.

Preservation age

Preservation age ranges from age 55 to 60 years, depending on your date of birth. If you were born before July 1960, then your preservation age is 55. If you were born on or after 1 July 1964, then your preservation age is 60 years. If you were born after June 1960 and before July 1964, then your preservation age will be 56, 57, 58 or 59 (see table below).

So, the short answer to your question is: if an individual has reached his or her preservation age, and then retires, he or she can withdraw any preserved super benefits. Remember, tax may be payable on any super benefits withdrawn before the age of 60. I explain the tax rules when withdrawing benefits before age 60 in the article Retiring before the age of 60: the tax deal.

Source: Australian Taxation Office superannuation website (www.ato.gov.au/super)

Note: If you have reached your preservation age but say, you don’t intend to retire then you must satisfy another condition of release to be able to access your benefits. Examples of some of the more common conditions of release are:

• starting a transition-to-retirement (TRIP). A TRIP is a special type of income stream/pension that permits an individual to access up to 10% of his or her pension assets each year without retiring, provided the individual has reached preservation age
• reaching the age of 65
• resigning or otherwise leaving a job on or after the age of 60

I explain the other conditions of release in the article 12 legal reasons to cash your super.

Related posts:

1. Retirement unlocks your super
2. 12 legal reasons to cash your super
3. Accessing super: Turning 55 is not enough

Trish’s response: I agree with you that the term ‘superannuation’ is confusing.

If you are employed, your employer must make super contributions on your behalf to a super fund. A super account is opened in your name, and those super contributions and earnings on those contributions belong to you.

You can also choose to make super contributions to your super account. The voluntary contributions and earning on those contributions belong to you.

The deal with super is: although super is your money, your super account enjoys tax concessions (maximum tax of 15%) which means the Government has imposed special rules that mean you cannot access the money until you retire after a certain age, or you satisfy another condition of release. I explain the conditions of release in the article 12 legal reasons to cash your super.

You can find other articles explaining how super works in the Super Basics section of SuperGuide.

Related posts:

1. Super for beginners, part 10: Can I use my super to reduce my mortgage?
2. Super for beginners, Part 9: If I retire and take my super, can I return to work?
3. Super for beginners, part 7: Can I split my super benefits with my spouse?

As I said earlier I left Australia and my employer, does this mean I can access my super? Also I am in the early stages of changing my citizenship to British what are the super rules governing ex-Australians and their super fund.

Trish’s response: You have a couple of questions here, but that’s not surprising considering you have left Australia and are changing citizenship.

Can I access my restricted benefit?

The term ‘restricted benefit’  is a technical term to describe certain benefits that can be accessed when an individual ceases an employment arrangement.

Briefly, there are two categories of superannuation benefits – ‘preserved’ and ‘non-preserved’, and non-preserved benefits are then split into, ‘restricted non-preserved’, and ‘unrestricted non-preserved’.

Unless you were a member of a super fund before July 1999, your super benefits will be preserved, and cannot be accessed until you satisfy a condition of release see article 12 legal reasons to cash your super.

If you were a member of a super fund before July 1999, then, whether you have non-preserved benefits within your super fund, depends on some complicated rules. Generally, any Superannuation Guarantee contributions made since July 1992 are preserved, although some made before July 1994 may not be preserved. If you have made any salary sacrificed contributions before July 1999, then some may be non-preserved depending on the arrangement that was in place.

The easiest way to check whether you have non-preserved benefits is to look at your latest member statement from your super fund. The statement should state whether you have any non-preserved benefits. If you can’t locate your member statement then contact your super fund and ask them directly.

Now, I’m going to add one more complication. If you do have restricted non-preserved benefits, you can access these benefits when you resign from an employment arrangement. If you have had restricted non-preserved benefits in the past, and ceased employment, then those restricted benefits become unrestricted and can be accessed at any time. You need to check with your super fund whether you have any unrestricted non-preserved benefits.

If you have a portion of your super benefits as ‘unrestricted non-preserved’ benefits, then you can apply to withdraw them from your super fund, less any benefits tax payable.

I am taking out UK citizenship. Can I access my super?

No, accessing super is not possible for the particular reason of permanent departure. In the past, the fact that an individual was leaving Australia permanently was an acceptable condition of release. If you supplied sufficient evidence, such as permanent residence in another country, job details and even citizenship application, then it was possible to access a super benefit before retirement. This condition of release no longer applies. I explain the access rules for temporary residents leaving Australia in the article I’m leaving Australia: Can I access my super?

Related posts:

1. Accessing super early: Permanent departure from Australia
2. I’m leaving Australia: Can I access my super?
3. 12 legal reasons to cash your super

Trish’s response: Many thanks for your kind words about our website, and we’re pleased that you have found it useful.

I’m assuming your son was a permanent Australian resident and Australian citizen before he departed Australia’s sandy shores, rather than a temporary resident. Australian citizens who then relocate overseas are treated in the same way as Australians living in Australia: they cannot access preserved super benefits until they reach preservation age and retire, or satisfy another condition of release. (I explain the conditions of release in my article 12 legal reasons to cash your super).

Preservation age for anyone born on or after 1 July 1960 is age 60, which is the preservation age for anyone aged 42. Preservation age ranges from age 55 (for those born before July 1960) through to age 60.

In the olden days (about 10 years ago) it was possible to access your preserved super benefits when you left Australia permanently subject to meeting certain conditions. The rules were changed from July 1998 which now means that any Australian citizen who moves overseas permanently cannot access super benefits unless they satisfy a condition of release. The rationale for this policy is that Australian citizens may return to Australia to retire, or at least have the option of retiring in Australia.

Note: Temporary Australian residents who have visited the country under an eligible temporary resident visa (temporary visa listed under the Migration Act 1958, but not subclasses 405 and 410) can withdraw any super benefits (less tax) when the visa expires and when they leave Australia. If a temporary resident doesn’t claim any his or her super benefits within six months of departing Australia, then the super fund may pay the super benefits to the Australian Tax Office (ATO). You then have to apply to the ATO for access to your super. You find more information about temporary residents accessing super benefits upon leaving Australia by reading Superannuation information for temporary residents departing Australia on the ATO website.

Related posts:

1. Accessing super early: Permanent departure from Australia
2. Unrestricted access to super, sometimes
3. Accessing super early: Temporary resident

Answer: Most super benefits are preserved until retirement or until the individual satisfies another condition of release such as turning 65, or starting a transition-to-retirement pension (TRIP).

A relatively unknown condition of release is where a person is aged 60 or over but under the age of 65 and they cease an employment arrangement. In these circumstances, the person can be considered ‘retired’ for the purposes of accessing super. If an employment arrangement continues however, then turning 60 on its own is not considered a condition of release.

The question you ask is whether shifting from full-time work to part-time is considered cessation of an employment arrangement, and hence ‘retired’ for the purpose of accessing super benefits. If the answer is yes, then a 60 year-old individual in these circumstances can access their super benefits without the need to retire from the workforce, or to start a TRIP. If no, then a 60 year-old individual can only access super if they satisfy another condition of release such as retiring or turning 65 or starting a TRIP.

According to the ATO, reducing your hours of work when you are aged 60 or over, rather than resigning or retiring, is not sufficient to satisfy this condition of release.

Related posts:

1. Super for beginners, Part 9: If I retire and take my super, can I return to work?
2. Turning 55: Taking super, tax and timing
3. Preservation age: I’m 58. Can I withdraw my super benefits?

The rules surrounding accessing your super have not changed. You cannot access your preserved super benefits unless you satisfy a condition of release, such as retiring, reaching the age of 65 or taking an income stream under the transition-to-retirement retirement rules.

If you were a member of a super fund before July 1, 1999, you may have some “unpreserved” benefits, which mean you can access them at any time. You can check whether you have this type of benefit with your super fund, or adviser if you have one.

The most common condition of release is retirement, provided you have reached your preservation age. Preservation age is 55 for anyone born before July 1, 1960. Preservation age gradually increases for those born on or after July 1, 1960, with the preservation age reaching the age of 60 for anyone born on or after July 1, 1964.

TRIPs: If you have reached your preservation age (currently 55) you have the option of starting a transition-to-retirement pension (TRIP), which gives you access to your super benefits while you are still working. If you are taking a TRIP and you are over the age of 60, your pension income will be tax-free and the earnings on assets financing the income stream will also be tax-free. There are stricter rules on the amount you can withdraw from such income streams, however, compared to other types of pensions. You also cannot commute such a pension to a lump sum, unless you retire or reach the age of 65.

Note: Another condition of release relates specifically to those over the age of 60. When a member has reached aged 60, he or she will be considered retired when an arrangement under which they were gainfully employed ceases. An individual who is aged 60 and continues working (with the same employer) with no intention of retiring cannot be considered “retired” for the purposes of accessing super benefits. An individual in these circumstances would need to terminate an employment arrangement.

You may also be able to access your super early in other limited circumstances, for example, if you are suffering financial hardship or permanent disability.

You can read about the other ways to access your super benefits in the article 12 legal reasons to cash your super.

Related posts:

1. Accessing super: Turning 55 is not enough
2. Preservation age: I’m 58. Can I withdraw my super benefits?
3. Accessing super early: Not for business debts

Trish’s response: I’m sorry that you are not well. I have broken up my response into three parts.

1. If an individual retires on or after the age of 60, then any super benefits received from a taxed source are tax-free. Most super benefits are from a taxed source, except certain benefits paid from some public sector super funds. If a person has been a public servant for a few years then he or she may want to check with their super fund whether they hold any benefits from an ‘untaxed source’. If they do, then some tax may be payable on those benefit
2. You mention that you have been unwell and your illness has meant that you are unable to work. Before taking the decision to retire, an individual in such a position may want to check whether their super fund account also pays premiums for disability insurance cover, and what circumstances such insurance is payable. It is worth an individual in such circumstances chatting to their super fund to check entitlements because any disability payout is in addition to your super benefits.
3. Under normal circumstances (that is, where a person chooses to retire rather than forced to retire due to ill-health), an individual aged 60 or over, is taken to have retired if an employment arrangement ends, and the trustee of the super fund is satisfied that the individual intends never again to become gainfully employed, either on a full-time or part-time basis. For a trustee to be satisfied, the super fund generally requires a fund member to complete a retirement declaration.

If an individual is aged 65 or over, he or she can automatically access preserved super benefits without proving retirement or another condition of release.

Related posts:

1. Accessing super: Turning 55 is not enough
2. Turning 55: Taking super, tax and timing
3. Tax-free super: what happens when I start a pension just before turning 60?