New advice on release of super funds for compassionate grounds

Applications for the release of funds must be made before December 10 otherwise they will not be assessed until after 22 January 2022 when the ATO reopens after the Christmas break.

The ATO also warned those applying for the release of funds due to compassionate reasons should factor in additional time for the fund to release any approved amounts from their super account.

The ATO said there are very limited circumstances for people to access superannuation early and clients may be allowed to withdraw some of their super on compassionate grounds for unpaid expenses – where clients have no other means of paying for these expenses.

The amount of super that can be withdrawn is also limited to what is considered reasonable to meet the unpaid expense.

Compassionate grounds include needing money to pay for:

• Medical treatment and medical transport for you or your dependant
• Making a payment on a home loan or council rates so you don’t lose your home
• Modifying your home or vehicle to accommodate your or your dependant’s severe disability
• Palliative care for you or your dependant
• Expenses associated with the death, funeral or burial of your dependant

The super you withdraw is paid and taxed as a normal super lump sum. The tax rate depends on various factors, including the client’s age and the components of the super lump sum. The nominated super fund will automatically deduct the tax from the super account.

Members of an exempt public sector super scheme (EPSSS), do not need to apply to the ATO, but directly to the nominated super scheme for early release of super. EPSSS has its own state and territory laws for early release of super.