In this guide
If you have suffered a Total and Permanent Disability (TPD), you may be able to claim on any TPD insurance you have through your super. If the claim is successful, the TPD benefit is paid into your super account (as an unrestricted non-preserved benefit) and combined with your existing super balance.
Once you meet the TPD claim definition, you are most likely to meet the ‘permanent incapacity’ condition of release. This means that if you have been permanently incapacitated due to physical or mental illness, you can access all your super from all your accounts (if you have multiple accounts) regardless of your age, provided you meet certain criteria.
For more information, see SuperGuide article Early release of super for illness or injury.
First, let’s understand the tax impact of making a lump sum withdrawal from super.
Tax on lump sum withdrawals
The information below relates to taxed super funds (the most common type).
If you are under 60 and withdraw a lump sum from your super account, tax will apply on the taxable component of that withdrawal. If you are under the preservation age (currently between 55 and 60 depending on your date of birth) the tax rate is 22% (including Medicare levy); or 17% (including Medicare levy) on the portion of the taxable component that is above $235,000 (in 2023-24) if you are over the preservation age but under 60. If you are over age 60, withdrawals are tax free.
For more information on the tax impact for different ages, including tax rates for untaxed funds, see your tax guide to accessing your super under age 60 and your tax guide to accessing your super over age 60.
