Accessing super early : terminally ill receive tax break

Individuals with a terminal medical condition are able to access their super lump sum payments tax-free, regardless of age.

A super fund can release super benefits to a member if they have a terminal medical condition. According to the legislation, a terminal medical condition exists if two registered medical practitioners have certified jointly or separately, that the member suffers from an illness, or has incurred an injury that is likely to result in the member’s death within 12 months of the date of certification. For each of these certificates, the certification period must not have ended. Further, at least one of the registered medical practitioners must be a specialist practicing in an area related to the illness or injury.

Note: Early access due to terminal illness is available from any super fund, including a self-managed super fund.

If a member of a SMSF is facing such an unfortunate circumstance then the appropriate certification must be produced before the super monies can be released. The ATO recommends that before making such a payment from a SMSF, that you check if your fund member has any other super accounts in existence and arrange the transfer of those benefits into the member’s account before making a payment under this condition of release.

Note: Alternatively, you can apply to the Australian Prudential Regulation Authority to access your super on compassionate grounds if you need the cash “to provide care for yourself or your dependant if you or your dependant is dying from a terminal medical condition. This kind of care is often referred to as ‘palliative care’.” Here is a link to more information on the compassionate grounds for early release.

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