Getting money out of super
A person may apply to the Australian Taxation Office (ATO) for a determination that an amount of preserved or restricted non-preserved superannuation benefits may be released on the grounds that it is required for one of the following unpaid expenses:
- to pay for medical treatment or medical transport for the person or a dependant; or
- to enable the person to make a payment on a loan to prevent foreclosure of a mortgage on the person's principal place of residence; or
- to modify the person's principal place of residence, or vehicle, or accommodate the special needs of the person, or a dependant, arising from severe disability; or
- to pay for expenses associated with the person's palliative care, in the case of impending death; or
- to pay for expenses associated with a dependant's:
- palliative care, in the case of impending death; or
- death; or
- funeral; or
If the money is required for medical treatment, the person is required to provide the ATO with medical certificates from two registered medical practitioners (at least one of whom must be a specialist) certifying that:
- the medical treatment is necessary to:
- treat a life threatening illness or injury; or
- alleviate acute, or chronic, pain; or
- alleviate an acute, or chronic, mental disturbance; and
- the treatment is not readily available to the person, or the dependant, through the public health system.
In all cases, when applying for early release of super on compassionate grounds, the individual must be able to demonstrate and satisfy the ATO that they do not have the financial capacity to meet the relevant expenses.
To apply for the release of super benefits on 'specified compassionate grounds':
- Check whether the superannuation fund trustee allows for the release of super benefits on compassionate grounds.
- Apply directly to the ATO via myGov. If a client is unable to apply online, they may contact the ATO to request an application form.
- If the application is approved, the ATO will notify the client by sending a message to their myGov inbox, and will notify the client's superannuation fund directly.
- Apply to the super fund to release the funds by providing a copy of the ATO approval letter and any other documentation the trustee requires. It is important to note that although the ATO must be satisfied that an application meets the criteria for early release of super, the final decision to pay out the benefit must be made by the trustee of the super fund.
- Pay expenses with the released amount and keep receipts as evidence.
Cashing restrictions under compassionate grounds
The amount released from super for someone meeting the compassionate grounds condition of release must be:
- a single lump sum, not exceeding an amount that is reasonably required, and
- in the case of preventing foreclosure on a mortgage on a principal home, the amount released in each 12-month period must not exceed three months of repayments plus 12 months of interest.
Compassionate grounds condition of release frequently asked questions
Question 1: My client (age 45) is unable to meet her daily living expenses and wishes to access some of her preserved super benefits. However, she cannot satisfy the severe financial hardship condition of release as she has not received an eligible Commonwealth income support payment. Can she access her super benefits under the compassionate grounds condition of release?
Answer: The compassionate grounds condition of release (applied for directly to the ATO) can only allow preserved superannuation benefits to be accessed in very limited circumstances, including:
Assuming the expenses that your client is unable to pay are general living expenses, it is unlikely that they will be able to access super benefits under this condition of release.
Question 2: My client's principal home is at risk of foreclosure because he is unable to continue to meet minimum mortgage repayments. Will he be able to access enough benefits under the compassionate grounds condition of release to enable him to pay off his mortgage?
Answer: No. The compassionate grounds condition of release allows access to preserved super benefits to prevent foreclosure on a principal home, however the amount of benefits that can be released is limited to three months of repayments and 12 months of interest in respect of the existing loan in each 12 month period.
Your client may, therefore, be able to apply to have some benefits released to enable continued repayments, but will not be able to access benefits to enable complete repayment of the loan.
|Review of rules for early release of superannuation
In December 2017, the Government announced a review of the current rules relating to early release of superannuation on grounds of severe financial hardship and compassionate grounds. A copy of the consultation paper is available on the Treasury website: https://treasury.gov.au/consultation/c2017-t246586 .
The review considers whether the current rules remain fit for purpose, that is whether there is an effective balance between preserving superannuation benefits for the objective of providing income in retirement and making superannuation available in limited cases of genuine hardship or situations where compassionate reasons are warranted.
The review will also cover whether superannuation assets should be available to pay compensation or restitution to victims of crime.
In November 2018, the Government released for a second round of consultation an issues paper with findings and draft proposals for reform of the rules governing the early release of superannuation benefits on compassionate and severe financial hardship grounds.
This consultation seeks views on:
A copy of this consultation paper is available on the Treasury website:
Pending the outcome of the review, rules relating to accessing super under severe financial hardship and compassionate grounds may change in due course.
Last modified: Wednesday, July 24, 2019