The Australian Tax Office (ATO) has announced that the deadline for the compassionate release of superannuation funds this year was 10 December 2021. Applications submitted after this date will likely be assessed from January 2022. The ATO has confirmed that their offices will close for the holidays on 24 December 2021, from midday, and will reopen on 4 January 2022.
Anyone hoping to access some of their super funds this year will need to have submitted their request by the deadline indicated and ensure they allow some extra time for the release to be approved.
Individuals that are members of an exempt public sector super scheme (EPSSS) do not need to apply to the ATO for this release of funds. They should make their request directly to their super scheme. Note that each state and territory has its own rules governing such early release, so you should confirm the applicable rules and deadlines with your super fund.
The ATO is however warning against following any advice to have your super funds transferred to a self-managed super fund (SMSF). This kind of transaction may be illegal and may attract heavy penalties if caught participating.
The ATO has further clarified the limited circumstances under which compassionate release of funds may be approved. They have stated that such a release of super funds may be done to cover unpaid expenses where an individual has no other means through which to cover these expenses. The amount that can be withdrawn will be limited to what can be reasonably expected to meet this unpaid expense.
It is also important to note that the amount paid will be taxed as a normal super lump sum. The applicable tax rate will depend on such factors as your age and the components of our super lump sum. The tax amount will be deducted from your super account automatically.
Amongst the applicable scenarios is when seeking medical treatment or wanting to cover medical transport costs for yourself or a dependant. Palliative care for yourself or a dependant and expenses associated with the death, funeral, or burial of a dependant may also qualify for access. Needing to make payment on a home loan or council rates to avoid losing your home is another permitted request. Other qualifying compassionate grounds include expenses from having to modify your home or vehicle to accommodate the needs of yourself or a dependant that has a severe disability.
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