Can you cash out your Australian super when you make aliyah?
No. If you are an Australian citizen or permanent resident, you cannot withdraw your superannuation simply because you are leaving for Israel. The Departing Australia Superannuation Payment (DASP), the famous “claim your super when you leave” route, is only for temporary visa holders whose visa has ceased. Australian and New Zealand citizens and Australian permanent residents are explicitly not eligible.1 Your super stays locked inside the fund until you reach a normal condition of release, and Israel can tax the eventual benefit.
Almost every new Australian oleh is blindsided by this. They have heard backpackers and working-holiday friends “cash out their super” on the way out of the country, and assume the same door is open to them. It is not, that door is keyed to a temporary visa, and the moment you hold a permanent visa (let alone citizenship) it closes for good.1 In aliyah terms: you do not get a lump sum at month 0. The money travels with you only as a preserved Australian retirement benefit that you reach years or decades later.
Not advice
Why does the DASP not apply to citizens and permanent residents?
Because the DASP exists to refund super to people who were never going to retire in Australia in the first place. You can generally claim a DASP only if you accumulated super while working on a temporary-resident visa, that visa has expired or been cancelled, and you have left and hold no other active Australian visa.1 A citizen or permanent resident fails the very first test, your right to live in Australia has not ceased. The ATO is blunt about it: if you are considering permanent residency, claim any DASP before the permanent visa is granted, because once you hold it you lose DASP eligibility permanently, even if you later leave.1
For an oleh who is an Australian citizen or PR, then, there is no “exit payment.” Your super simply remains preserved, held until a standard release event, and continues to sit under Australian super law no matter where you live.
When can you actually access your preserved super?
You access preserved super only when you satisfy a condition of release, and for almost all olim that means reaching preservation age. For anyone born after 30 June 1964 , which is most working-age olim today, preservation age is 60.3 The two practical doors are:
| Trigger | What it unlocks | Tax on a lump sum (taxed element) |
|---|---|---|
| Reach 60 (preservation age) and retire / cease an employment arrangement | Full access to preserved benefits | Taxed element is tax-free from age 603 |
| Reach 65 | Full access, no work test at all | Taxed element is tax-free3 |
| Before 60 (limited early-access grounds only) | Generally locked; narrow hardship/medical exceptions | Concessional taxed component plus a low-rate cap below 60 |
The key point for an oleh: making aliyah is not a condition of release. Living in Israel does not bring your super forward by a single day. If you land at, say, age 38, you are looking at roughly 22 years before the preservation-age door opens, and the super keeps being taxed and administered in Australia the whole time.3
Does Australia keep taxing the fund while you live in Israel?
Yes. Australian super is taxed inside the fund regardless of where the member lives. In the accumulation phase, the fund pays a flat 15% on investment earnings, with a one-third discount that brings the effective rate on capital gains for assets held more than 12 months down to about 10%.4 A separate layer, the Division 296 measure, was deferred: it now commences on 1 July 2026 (the 2026-27 year), with the first assessment at 30 June 2027 on realised earnings. It adds a further 15%on earnings attributable to the portion of a member’s total super balance above A$3 million, a 30% effective rate on that slice, rising to a further 25% (a 40% effective rate) on the portion above A$10 million; both thresholds are now indexed to inflation.4 None of this depends on your residence, it is a feature of the fund, not of you.
In the US you would think of a 401(k) as your account; in Australia the super fund is taxed as a separate entity, and that entity stays inside the Australian system after you leave. That is precisely why the locked-but-still-taxed super is a cross-border issue and not a simple “leave it and forget it.”
Why is a self-managed super fund (SMSF) the real trap for olim?
Because an SMSF can lose its tax-concessional status the moment its trustees move abroad. An SMSF must satisfy three residency conditions at all times to be an Australian super fund: it was established in Australia (or holds Australian assets), its central management and control is ordinarily in Australia, and it meets the active member test (active members who are non-residents must not hold 50% or more of the fund).2 The fund still meets the central-management test if control is temporarily outside Australia for up to two years, but go past that, or actively run the fund from Israel, and it can become non-complying.2
The cost of getting this wrong is brutal. A non-complying SMSF is taxed at the top marginal rate of 45%instead of the concessional 15%, and not only on a year’s earnings but, in the year it becomes non-complying, effectively on the fund’s value.24 For an oleh with an SMSF, the safe options are to appoint an Australian-resident professional trustee or an enduring power of attorney to hold central management and control in Australia, or to roll the SMSF into a large APRA-regulated retail/industry fund before you go. Decide this before aliyah, not in month 25 abroad when the two-year clock has already run out.
How does Israel tax your Australian super lump sum or pension?
Israel does not tax it at all during your first ten years. New olim receive a 10-year exemption from Israeli tax on foreign-source income and gains, which covers income arising on your Australian super and a foreign-source withdrawal taken inside that window.7 Note the 2026 reform: from 1 January 2026, the exemption became report-but-still-tax-exempt, the income stays exempt from Israeli tax, but olim who become Israeli residents in 2026 or later must now report the foreign income and assets to the Israel Tax Authority.7 Register your status early with מס הכנסה (Mas Hachnasa) so your Israeli-resident position is documented from day one.
From year 11, the super is no longer automatically exempt. Israel then taxes a foreign pension under the Income Tax Ordinance with a protective cap: an oleh pays no more Israeli tax on a foreign pension than they would have paid in the source country (with a 35%-exempt alternative for the pension stream).7Practically, the Australia-Israel treaty does most of the heavy lifting here, see the next section. Keep the Australian, Israeli, and (if relevant) US treatments in three separate mental columns; they do not collapse into one “the tax is X” answer.
What does the Australia-Israel treaty say about pensions?
It generally hands the taxing right to your country of residence. The Australia-Israel double-tax Convention, which entered into force on 6 December 2019 and applies for Australian income tax from 1 July 2020, follows the standard OECD pattern under which pensions and similar remuneration are taxable in the state where the recipient is resident.5So once you are an Israeli tax resident, your Australian super pension is in principle Israel’s to tax, and you look to Israeli rules (including the 10-year exemption and, later, the source-country cap) rather than Australian rates.57
Two caveats keep this from being automatic. First, the most useful planning fact is that a super lump sum’s taxed element is already tax-free in Australia from age 60,3 so for many olim there is little or no Australian tax to relieve in the first place. Second, the treaty resolves double taxation; it does not erase reporting. You may still have Australian filing touch-points, and from 2026 you have an Israeli reporting obligation even while the income is exempt.7 Treat the treaty as the tie-breaker, not as a switch that turns the whole question off.
Quick check
Why can't an Australian citizen oleh use the DASP to cash out their super on aliyah?
Should you leave the super in Australia or plan to draw it later?
There is no single right answer, because you usually cannot move it anyway, the more realistic decision is how to hold and eventually drawa preserved benefit you can’t access for years. Leaving it invested keeps it compounding in a concessionally taxed Australian fund, but you carry AUD currency risk against the shekel for the whole waiting period, and you must keep the fund compliant (critically, never run an SMSF’s central management from Israel past two years).2 When the benefit finally becomes accessible, the question becomes whether to take a lump sum or an income stream, and how the Israeli source-country cap and the treaty land on it.57 At that point you can convert proceeds to מטבע חוץ (Matbea Chutz) and rebuild in shekel- or dollar-denominated assets.
As an Australian citizen or permanent resident you cannot cash out your super on aliyah; the DASP is for temporary-visa holders only, so the super stays preserved until you reach a condition of release (preservation age 60 for those born after 30 June 1964, or 65). Australia keeps taxing the fund while you live in Israel, and Israel exempts it during the 10-year window before taxing it from year 11 under the treaty and the source-country cap.
No. The DASP that lets people cash out super on leaving is for temporary-visa holders only; Australian and New Zealand citizens and Australian permanent residents are not eligible. As a citizen or PR oleh your super stays preserved until you reach a condition of release, which means preservation age 60 for those born after 30 June 1964, or 65 with no work test. Aliyah is not a release event.
Possibly, if you genuinely held a temporary visa, that visa has ceased, you have left Australia, and you hold no other active Australian visa. But if you are about to be granted permanent residency, the ATO warns you to claim the DASP before the permanent visa issues, because once you hold a permanent visa DASP eligibility is lost permanently, even if you later emigrate.
Yes. The fund pays tax in Australia regardless of where you live: a flat 15% on accumulation earnings (about 10% effective on long-held capital gains). The Division 296 measure, deferred to commence 1 July 2026 with the first assessment at 30 June 2027, adds a further 15% on realised earnings attributable to balances above A$3 million (a 30% effective rate), rising to a further 25% above A$10 million (40% effective), with both thresholds indexed. The super is taxed as a fund, not as your personal account, so leaving the country does not switch the Australian tax off.
It can become non-complying. An SMSF must keep its central management and control ordinarily in Australia; a temporary absence of up to two years is tolerated, but beyond that, or if you actively control the fund from Israel, it can fail the residency conditions. A non-complying SMSF is taxed at 45% instead of 15%. The standard fixes are to appoint an Australian-resident professional trustee or enduring power of attorney to keep central management and control in Australia, or to roll the SMSF into an APRA-regulated fund before departure.
Not during your first ten years as a new oleh: foreign-source income, including super, is exempt from Israeli tax in that window, though it is reportable to the Israel Tax Authority for those who became residents from 1 January 2026. From year 11, Israel taxes a foreign pension under the Ordinance, capped at the source-country tax, and the Australia-Israel treaty assigns the pension to your country of residence, which is Israel.
Effectively yes, in most cases. Super is typically invested through managed funds or ETFs, which the IRS treats as PFICs, bringing Form 8621 and the Section 1291 regime each year you hold them. Super is also often a reportable foreign trust and a foreign financial account for FBAR and Form 8938. These US obligations apply even while the super is locked until preservation age, on a clock entirely separate from Australian law.
In Australia, the taxed element of a super lump sum is tax-free from age 60, which often means little or no Australian tax to relieve. The remaining question is the Israeli side: if you draw it inside the 10-year window it is exempt in Israel; if you draw it later, Israel taxes it subject to the source-country cap and the treaty residence-state rule.
