At times when we are struck down with a family death or an illness, the last thing we need is to be stuck in a stressful financial situation (how are we going to pay?) on top of going through the emotional pain of the event. Not everyone has the $20,000 or $30,000 sitting around to pay for required medical treatment or the expense of a funeral let along home or car modifications to name a few.
Under certain circumstances, you may be able to gain early access to your super on compassionate grounds.
Compassionate grounds may include:
Medical treatment (transport) for you or one of your dependents (spouse or child). (medical treatment can’t be readily available through the public health system, the condition must be life-threatening (illness or injury), or it must generate acute or chronic pain/mental illness).
Palliative care for you or one of your dependents. (accommodation cost in a hospice, palliative care service provider costs, palliative care management costs).
Expenses associated with a death, funeral or burial of one of your dependents. (approval does not cover the cost of venue hire or catering purposes).
Expenses associated with the modification of your home or vehicle (payments to modify home/car, purchase a modified car, purchase of disability aids) for you or your dependants with a severe disability. (dependents home must also be your principal place of residence if rental – only if the landlord has provided written consent).
Mortgage or council rates payment so you don’t lose your family home. (must be your principal residence and you are legally responsible for the repayments and listed on the written statement from your mortgagee). You can only access the amount necessary to prevent your home from being repossessed, in either mortgage repayments or arrears in council rates if the council has begun to take possession of or to sell your property.
Mortgage – Up to the following limit within any 12 month period of 3 months worth of mortgage repayments plus 12 months of interest on the outstanding balance of the loan.
Example: Your monthly repayment is $2,058 ($2,058 x 3 = $6,174) 12 months interest on your loan $14,400. Maximum you can gain access to is $20,574 ($6,174 + $14,440).
The amount of withdrawal is only limited to what you reasonably need. It will be paid and taxed as a normal lump sum withdrawal. Under the preservation age generally, taxed between 17%-22%. Over preservation, age will not be taxed.
Note: Early release can only be used to pay for these expenses if they are unpaid. They cannot be used to reimburse you after expenses have already been paid or if you have borrowed from family members/friends to pay them.