Super Withdrawal Rules for Self-Employed Arborists

Current preservation ages are:

The preservation age is the earliest age when you can access your super, and it’s based on your date of birth:

• Born before 1 July 1960: Age 55

• Born 1 July 1960 – 30 June 1961: Age 56

• Born 1 July 1961 – 30 June 1962: Age 57

• Born 1 July 1962 – 30 June 1963: Age 58

• Born 1 July 1963 – 30 June 1964: Age 59

• Born from 1 July 1964: Age 60

Since 1 July 2024, anyone born after 1 July 1964 has a preservation age of 60. This means if you’re under 60, you still have several years before you can normally withdraw your super.

Normal Super Withdrawal Options

Once you reach preservation age, you have several options for accessing your super fund balance. You can access super when you turn 65, even if you’re still working. If you’re between 60 and 65, you can access your super if you permanently retired from gainful employment.

For arborists who might want to wind down gradually, there’s also the option of a retirement income stream. This lets you access some of your super account balance while still working, which could help if you want to reduce your physical workload as you get older.

When you’re able to access your super after preservation age and meet the conditions of release, withdrawals are typically tax free if you’re over 60.

Early Access to Super: Very Limited Circumstances

The reality is that early access to your super is severely restricted, and business financial difficulties don’t qualify you for early release. The ATO is clear that your super fund exists for retirement, not to bail out struggling businesses. You can only access super early in these specific circumstances:

Severe Financial Hardship

You might qualify if you’ve been receiving Commonwealth income support payments for 26 continuous weeks and can’t meet reasonable living expenses. The maximum you can withdraw is $10,000 once per 12-month period from your super account, and you’ll pay tax on the withdrawal.

The eligibility criteria are strict – you must demonstrate you cannot pay for basic living expenses like food, accommodation, clothing, medical treatment, or education costs.

Compassionate Grounds

This covers special circumstances like medical treatment costs, preventing home foreclosure, or funeral expenses for dependants. You need ATO approval first under very limited circumstances, and the amount is limited to what you reasonably need to cover the specific expense.

Medical costs that qualify include treatment for life-threatening illness or injury, medical transport, and accommodation costs related to medical treatment.

Terminal Illness or Permanent Incapacity

If you’re certified by medical practitioners as having a terminal illness or permanent incapacity, you can access super early. For permanent incapacity, you must be permanently incapacitated and unlikely to work again in any employment arrangement.

If permanently incapacitated, you can receive your super balance as lump sums or establish a retirement income stream.

What This Means for Your Arborist Business

Here’s what’s crucial to understand: using your super account to fund business operations or cover seasonal cash flow gaps is illegal. The ATO regularly disqualifies Self-Managed Super Fund trustees who attempt this, and you’ll face significant penalties including tax on the withdrawal.

Instead of relying on your super fund for business funding, focus on building proper business cash flow management and accessing legitimate business funding options. Your money in super should remain untouched to grow for your retirement.

Self-Employed Super Contributions

As a self-employed arborist, you’re not required to pay super guarantee for yourself, but you can make voluntary contributions to your super account. This is actually one of your biggest opportunities. You can contribute up to $30,000 annually in concessional contributions and claim a full tax deduction.

Given that arborists often face significant income disparities and irregular cash flow, making regular contributions when business is good can provide crucial retirement security.

Special Schemes and Insurance Cover

Your super fund may also include insurance cover for income protection, total and permanent disability, or life insurance. This insurance cover can provide financial support if you’re injured on the job or become unable to work.

Some arborists might also consider the Home Super Saver Scheme if they’re looking to buy their first home, though this has specific eligibility criteria and contribution limits.

Planning Your Super Strategy

Your physical work won’t last forever, and with the average arborist facing high injury risks and seasonal income variations, building your super account balance early is essential. Consider working with an accountant who understands the tree services industry to develop a super contribution strategy that works with your irregular cash flow patterns.

Remember that super death benefits also protect your family if something happens to you at work. Making sure your super fund has current beneficiary details ensures your family can access the money when they need it most.

The conditions of release are strict, early access options are limited to very limited circumstances, and your future financial security depends on the decisions you make today about building and preserving your super balance. Ready to get your super strategy sorted? Talk to us about structuring your contributions to maximise your retirement savings while managing the ups and downs of running an arborist business.