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Condition of release

Conditions of release

Section: 7.4

For member to cash their preserved benefits or restricted non-preserved benefits, they must satisfy one of the condition of release. Unrestricted non-preserved benefits may be cashed at any time.

Some conditions of release restrict the form of the benefit or the amount of benefit that can be paid. These are known as 'cashing restrictions'.

Common conditions of release

The conditions of release are set out in Part 1 of schedule 1 to the SIS Regulations are reproduced as follow:

Column 1 Column 2 Column3
Item Conditions of release Cashing restrictions
101 Retirement Nil
102 Death Nil
102A Terminal Medical condition Nil
103 Permanent incapacity Nil
103A Former temporary resident to whom regulation 6.20A or 6.20B applies, requesting in writing the release of his or her benefits Amount that is at least the amount of the temporary resident's withdrawal benefit in the fund, paid:

a. As a single lump sum,

b. if the fund receives any combination of contributions, transfers and rollovers after cashing the benefits  - in a way that ensures that the amount is cashed

104 Termination of gainful employment with a standard employer-sponsor of the regulated superannuation fund on or after 1 July 1997 (where the member's preserved benefits in the fund at the time of the termination are less than $200) Nil
105 Severe financial hardship For a person taken to be in severe financial hardship under paragraph 6.01(5)(a) - in each 12 month period (beginning on the date of first payment), a single lump sum not less than $1,000 (except if the amount of the person's preserved benefits and restricted non-preserved benefits is less than that amount) and not more than $10,000.

For a person taken to be in severe financial hardship under paragraph 6.01(5)(b) --Nil

106 Attaining age 65 Nil
107 The Regulator has determined under subregulation 6.19A(2) that a specified amount of benefits in the regulated superannuation fund may be released on a compassionate ground. A single lump sum, not exceeding an amount determined, in writing, by the Regulator, being an amount that:

a. taking account of the ground and of the person's financial capacity, is reasonably required; and

b. in the case of the ground mentioned paragraph 6.19A(1)(b) --in each 12 month period (beginning on the date of first payment), does not exceed an amount equal to the sum of:

i. 3 months' repayments; and

ii. 12 months' interest on the outstanding balance of the loan

107A The Regulator has determined under subregulation 6.19B(3) (about coronavirus) that a specified amount of benefits in the regulated superannuation fund may be released on a compassionate ground A single lump sum, not exceeding the amount determined, in writing, by the Regulator in relation to the fund
108 Termination of gainful employment with an employer who had, or any of whose associates had, at any time, contributed to the regulated superannuation fund in relation to the member 1. Preserved benefits: Non-commutable life pension or non-commustable life annuity

2. Restricted non-preserved benefits: Nil

109 Temporary incapacity A non-commutable income stream cashed from the regulated superannuation fund for:

a. the purpose of continuing (in whole or part) the gain or reward which the member was receiving before the  temporary incapacity; and

b. a period not exceeding the period of incapacity from employment of the kind engaged in immediately before the temporary incapacity

109A For acquiring a superannuation interest (within the meaning of the 1997 Tax Act) that supports a deferred superannuation income stream to be provided under a contract or rules that meet the standards of subregulation 1.06A(2) The restrictions contained in paragraph 1.06A(3)(e)
110 Attaining preservation age Any of the following:

a. a transition to retirement income stream

b. a non-commutable allocated annuity

c. a non-commutable allocated pension

d. a non-commutable annuity

e. a non-commutable pension

111 Being a lost member who is found, and the value of whose benefit in the fund, when release, is less than $200 Nil
111A The Commissioner of Taxation gives a superannuation provider a release authority under Division 131 in Schedule 1 to the Taxation Administration Act 1953 The restrictions contained in sections 131-35 and 131-40 in that Schedule
111B A person gives a superannuation provider a release authority under section 135-40 Schedule 1 to the Taxation Administration Act 1953 The restrictions contained in sections 135-75 and 135-85 in that Schedule
113 A person gives a transitional release authority to a superannuation provider under section 292-80B of the Income Tax (Transitional Provisions) Act 1997 Restrictions contained in subsections 292-80C(1) and (2) of the Income Tax (Transitional Provision) Act 1997
113A A former resident of Australia has:

a. moved permanently to New Zealand; and

b. nominated a provider of a KiwiSaver Scheme for the purposes of this item

Amount that is at least the amount of the former resident's withdrawal benefit in the fund, paid:

a. as a single lump sum,

b. if the fund receives any combination of contributions, transfers and rollovers after cashing the benefits - in a way that ensures that the amount is cashed

114 Any other condition, if expressed to be a condition of release, in an approval under subparagraph 62(1)(b)(v) o the Act Restrictions expressed in the approval to be cashing restrictions applying to the condition of release

Part 2 - Approved deposit funds

Column  1 Column 2 Column 3
Item no. Conditions of release Cashing restrictions
201 Retirement Nil
202 Death Nil
202A Terminal medical condition Nil
203 Permanent incapacity Nil
204 Former temporary resident to whom regulation 6.24A applies, requesting in writing the release of this or her benefits Amount that is at least the amount of the temporary resident's withdrawal benefit in the fund, paid:

a. as a single lump sum; or

b. if the fund receives any combination of contributions, transfers and rollovers after cashing the benefits - in a way that ensures that the amount is cashed

204A The trustee is required to pay an amount to the Commissioner of Taxation under the Superannuation (Unclaimed Money and Lost Members) Act 1999 for the person's superannuation interest in the fund Amount that the trustee is required to pay to the Commissioner of Taxation under the Superannuation (Unclaimed Money and Lost Members) Act 1999 for the person's superannuation interest in the fund, paid as a lump sum to the Commissioner
205 Severe financial hardship For a person taken to be in severe financial hardship under paragraph 6.01(5)(a) - in each 12 month period (beginning on the date of first payment), a single lump sum not less than $1,000 (except if the amount of the person's preserved benefits and restricted non-preserved benefits is less than that amount) and not more than $10,000.

For a person taken to be in severe financial hardship under paragraph 6.01(5)(b) --Nil

206 Attaining age 65 Nil
207 The regulator has determined under subregulation 6.19A(2) that a specified amount of benefits in the approved deposit fund may be released on a compassionate ground. A single lump sum, not exceeding the amount determined, in writing, by the Regulator, being an amount that:

a. taking account of the ground and of the person's financial capacity, is reasonably required, and

b. in the case of the ground mentioned in paragraph 6.19A(1)(b) --each 12 month period (beginning on the date of first payment), does not exceed an amount equal to the sum of:

i. 3 months' repayments; and

ii. 12 months' interest on the outstanding balance of the loan

207AA The regulator has determined under subregulation 6.19B(3) (about coronavirus) that a specified amount of benefits in the approved deposit fund may be released on a compassionate ground A single lump sum, not exceeding the amount determined, in writing, by the Regulator in relation to the fund
207A For acquiring a superannuation interest (within the meaning of the 1997 Tax Act) that supports a deferred superannuation income stream to be provided under a contract or rules that meet the standards of subregulation 1.06A(2) The restrictions contained in paragraph 1.06A(3)(e)
208 Attaining preservation age Any of the following:

a. Transition to retirement income stream

b. a non-commutable allocated annuity

c. a non-commutable allocated pension

d. a non-commutable annuity

e. a non-commutable pension

208A The Commissioner of Taxation gives a superannuation provider a release authority under Division 131 in Schedule 1 to the Taxation Administration Act 1953 The restrictions contained in sections 131-35 and 131-40 in that Schedule
208B A person gives a superannuation provider a release authority provider under section 292-80B of the Income Tax (Transitional Provisions) Act 1997 The restrictions contained in section 135-75 and 135-85 in that Schedule
210 A person gives a transitional release authority to a superannuation provider under section 292-80B of the Income Tax (Transitional Provisions) Act 1997 Restrictions contained in subsections 2912-80C(1) and (2) of the Income Tax (Transitional Provisions) Act 1997
211 Being a lost member who is found, and the value of whose benefit in the fund, when released, is less than $200 Nil

Source: https://www6.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_reg/sir1994582/sch1.html

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Wednesday, September 16, 2020