Access super under TPD

08 Jun 2023
Lyn Formica

Lyn Formica

Head of Education & Content

Are medical certificates always necessary when an SMSF member accesses their super under the permanent incapacity condition of release?

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As a general rule, super benefits may only be accessed once a member has reached their preservation age (between 55 and 60 depending on when they were born). Even then, until they have retired or turned 65, there are generally limits on how members can access their super and how much of it they can have.

But there are some circumstances where members can bypass these rules and access their super early. One of these is the permanent incapacity or TPD condition of release.

To satisfy the permanent incapacity condition of release, the trustee must be reasonably satisfied the member is unlikely, because of ill health (whether physical or mental), to engage in gainful employment for which they are reasonably qualified by education, training or experience.

But how does an SMSF trustee become satisfied as to a member’s incapacity?

There is no specific requirement in the super law for SMSF trustees to obtain medical certificates or other evidence of the member’s ill-health or injury. That said, the approach we generally take is to encourage members to obtain certificates from two legally qualified medical practitioners confirming that it is unlikely the member can ever be gainfully employed in a capacity which they are reasonably qualified because of education, training or experience.


Without some form of documented medical evidence, it will be difficult for the fund’s auditor (and the ATO) to be satisfied that the benefit payment rules have been met.

But why two certificates? 

This is because, if the member is seeking to draw a lump sum or commence a pension following their incapacity, tax concessions are only offered where two certificates are obtained. These tax concessions include:

  • for those taking a lump sum, an additional tax free component broadly reflecting the period during which the member could have expected to be employed but is now unable to work, or
  • for those drawing their benefits in the form of a pension, a 15% tax offset on the taxable portion of the pension received.

These tax concessions are generally irrelevant for those over 60 (because the payments they receive are already tax free) but may provide significant benefits for members under 60. Note also that an additional tax free amount may reduce the tax paid by any non-dependant beneficiaries who inherit the member’s super regardless of their age.

Of course, it will also be important to check the trust deed of the particular fund to make sure the deed doesn’t impose any particular requirements.

Want to know more about the permanent incapacity condition of release? We have a wealth of information in the Heffron Super Companion including how to calculate the additional tax free component, strategies which can be employed to maximise the amount of tax free component and how “old” a medical certificate can be before it can no longer be used as evidence.


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