How to Apply for Early Release of Super on Compassionate Grounds in Australia

What expenses qualify for compassionate release?

Compassionate release is not a general way to access super because you are short of money. The Superannuation Industry (Supervision) Regulations limit it to defined circumstances, and the ATO must also be satisfied that you cannot meet the expense without accessing your super.

The recognised grounds include:

• medical treatment for you or your dependant;
• medical transport for you or your dependant;
• making a payment on a loan to prevent foreclosure or a mortgagee exercising a power of sale over your principal place of residence;
• modifying your principal home or vehicle to accommodate special needs arising from your or your dependant's severe disability;
• expenses associated with your palliative care where death is impending;
• palliative care for a dependant where death is impending; and
• expenses associated with a dependant's death, funeral or burial.

The ATO can only approve the amount reasonably required to meet an eligible expense. Ordinary debts, everyday living costs and expenses outside the prescribed grounds do not become eligible merely because they are difficult to afford.

You must show that you cannot pay another way

A central eligibility test is whether you have the financial capacity to meet the expense without accessing your super.

The ATO may consider whether the expense can reasonably be met through available savings, assets, borrowing, insurance, government assistance or other realistic funding sources. Compassionate release is intended to be used where those alternatives are unavailable or insufficient.

If you have already borrowed money to pay an otherwise eligible expense, you may still be able to apply where the borrowed amount remains outstanding, but additional evidence is required.

What medical treatment can qualify?

For medical treatment, the legislation imposes a specific clinical test. The treatment must be necessary to:

• treat a life-threatening illness or injury;
• alleviate acute or chronic pain; or
• alleviate an acute or chronic mental disturbance.

The treatment must also not be readily available to you or your dependant through the public health system.

You need certification from two registered medical practitioners. At least one must be a specialist practising in an area relevant to the condition or treatment.

For example, where the application relates to treatment for a life-threatening condition, one report must come from an appropriately relevant specialist. Allied health professionals who are not registered medical practitioners do not replace the two required medical certifications.

What evidence should a medical application include?

The ATO requires evidence of both the medical criteria and the amount being claimed. Depending on the circumstances, this can include:

• medical reports from the required practitioners;
• an itemised treatment quote or invoice;
• medical transport quotes or invoices where transport is claimed;
• evidence identifying the patient and provider; and
• evidence of a dependant relationship if you are paying another person's expense.

Use current, itemised documents. The ATO guidance requires unpaid quotes to generally be no more than 6 months old and unpaid invoices to generally be no more than 30 days old when you apply.

Can compassionate release stop your home being sold?

You may apply where money is required to make a payment on a loan to prevent foreclosure of a mortgage or the mortgagee exercising an express or statutory power of sale over your principal place of residence.

This ground is not a general method for paying an ordinary mortgage instalment or clearing other debts. The threat to your home must meet the prescribed foreclosure or forced-sale conditions.

The amount that can be released under the mortgage ground is restricted by superannuation law. The maximum ordinarily reflects up to 3 months of repayments plus 12 months of interest on the outstanding loan balance within the relevant 12-month period.

Your evidence needs to show the loan, arrears and genuine risk that the lender will foreclose or exercise a power of sale if payment is not made.

Home or vehicle modifications for severe disability

Compassionate release can cover modifications to your principal place of residence or vehicle where they are needed to accommodate special needs arising from a severe disability affecting you or a dependant.

The ATO needs evidence connecting the disability to the proposed modification as well as itemised evidence of the cost. A general renovation or vehicle upgrade does not qualify merely because it would make daily life easier.

Palliative care, death, funeral and burial costs

You may apply for expenses associated with your own palliative care where death is impending. The rules also cover palliative care for a dependant and eligible expenses associated with a dependant's death, funeral or burial.

The amount claimed must relate to the qualifying expense and be supported by appropriate documentation such as medical evidence, invoices or itemised quotes.

Contact your super fund before submitting the application

The ATO directs applicants to speak with their super fund before lodging a compassionate-release application.

Confirm:

• that the fund permits early release on compassionate grounds;
• that you have enough available super to fund the proposed withdrawal;
• how much tax the fund expects to withhold;
• whether the fund charges a withdrawal or processing fee;
• what identification and payment documents the fund requires; and
• whether withdrawing the amount could affect insurance or other benefits associated with your account.

If you have multiple super accounts and are unsure where your retirement savings are held, the Helpydo guide on finding lost super and your super accounts may help you identify them before applying.

How do you apply online?

The main application route is through ATO online services linked to myGov.

1. Sign in to myGov.
2. Open the Australian Taxation Office service.
3. Select Super.
4. Select Manage.
5. Select Compassionate release.
6. Complete the eligibility checklist and application.
7. Select the super account from which you want the approved amount released.
8. Upload the required evidence.
9. Review the information carefully and submit the application.

After submitting online, you receive a receipt ID. You can also view the application and uploaded documents through ATO online services.

What if you cannot apply online?

If you do not have access to ATO online services, you can request a paper compassionate release application from the ATO.

The ATO directs applicants in Australia to call 13 10 20 to request the paper form. Applicants overseas can contact the ATO on its international number. Completed paper applications and supporting evidence are posted to the ATO's compassionate release processing address.

If you apply from overseas, supporting documents should be certified where required. Documents in another language must be translated into English using an authorised translation service, and foreign-currency quotes or invoices must be converted to Australian dollars.

How long does an application take?

The ATO states that digital applications are generally assessed within 14 days. Paper applications can take up to 28 days.

An application can take longer where evidence is incomplete, additional information is needed or the circumstances require further verification.

The ATO advises you of the outcome and provides a written decision. For online applicants, correspondence is normally available through the myGov inbox.

What happens if the ATO approves your application?

Approval does not mean the ATO pays the money to you.

The determination identifies the superannuation entity and the maximum amount that may be released. The ATO provides the determination to you and the relevant super fund.

You then need to contact the fund and complete its withdrawal process. The fund may ask for identity documents, bank details or its own benefit-payment form before releasing the money.

A compassionate release determination permits a single payment up to the approved amount. Your fund also needs to comply with its governing rules and applicable superannuation law.

Is compassionate release of super taxed?

Yes. Super released on compassionate grounds is generally paid and taxed as a normal super lump sum.

The tax withheld depends on factors such as your age and the taxable and tax-free components of the account. Before applying, ask your fund how much tax it expects to deduct. If you need a specific net amount to pay an eligible bill, the gross amount requested may need to allow for that withholding, subject to the ATO's approval of the eligible expense.

Compassionate grounds are different from severe financial hardship

Compassionate release and severe financial hardship are separate conditions of release.

The ATO decides applications for compassionate release. Severe financial hardship applications are generally made directly to your super fund and use different eligibility rules, including income-support requirements in many cases.

Being unable to meet ordinary household expenses does not by itself turn those costs into compassionate-ground expenses.

Keep evidence of how the released money is used

If approved, use the withdrawal for the expense described in the application. The ATO can ask for evidence showing what the released money was used for.

The ATO warns against making false or misleading statements or using compassionate-release arrangements to access retirement savings for ineligible lifestyle or non-critical expenses. Early access also reduces the amount remaining invested for retirement.

Common compassionate release mistakes to avoid

• Applying for ordinary financial hardship. General living costs and debts do not qualify unless they fit a specific compassionate ground.
• Skipping the super fund check. ATO approval is of little use if the selected fund cannot make the payment or the account balance is insufficient.
• Submitting an unitemised quote. Evidence should show the individual services or expenses and their costs.
• Using old evidence. Check the ATO's current age requirements for unpaid quotes and invoices before applying.
• Missing a specialist medical report. Medical-treatment applications require two registered medical practitioners and at least one relevant specialist.
• Assuming ATO approval transfers the money automatically. You still need to claim the approved amount from your super fund.
• Requesting only the invoice amount without considering tax. Ask the fund how much will be withheld before deciding the gross amount required.
• Giving another person your myGov credentials. Complete the secure government application yourself or use appropriately authorised assistance without sharing your myGov sign-in details.