Rules around early release of super benefits misunderstood.
The ATO has revealed the circumstances allowing the early release of superannuation benefits on compassionate grounds in general have been misunderstood.
The regulator took over responsibility for this area of the retirement saving system on 1 July 2018 and has noted the frequency of errors it has witnessed since that date.
“In a large number of cases, the member doesn’t meet the requirements for accessing their super on compassionate grounds,” it said.
However, it pointed out this did not mean an avenue for the early release of benefits was unavailable in those situations.
“In some cases [members] may be eligible for release of their super under the condition of severe financial hardship or temporary incapacity,” it noted.
As such, it has taken steps via a recent communique to clarify the conditions that must be met before an individual’s superannuation entitlement can be released on compassionate grounds.
To this end, it has specified certain criteria must be satisfied for the early access of superannuation benefits for compassionate reasons.
These include the need to service costs incurred for medical treatment and medical transport for the fund members or a dependant, palliative care for the member or dependant, payment of a loan or local council rates so they do not lose their home, modifications to their home or vehicle or the purchase of disability aids due to the disability of a member or dependant, and the death, funeral or burial of a dependant.
Conversely, the ATO emphasised situations where a super fund member cannot meet reasonable and immediate family living expenses, or cannot work or has to work fewer hours because of a medical condition as those that would not qualify for the early release of benefits on compassionate grounds.
Instead, the regulator suggested these circumstances could be covered under the rules governing early release of a member’s super due to financial hardship or temporary incapacity.
By Darin Tyson-Chan
Self Managed Super
27 February 2019