Q: I have a tenant who is about to be evicted from their rental home. He has a small super benefit. Can he access that under the ‘severe financial hardship’ rules?
A: We’re sorry to read about your tenant.
We’re not aware of the full circumstances of your tenant’s situation but if he is receiving Centrelink benefits he may be able to access super benefits due to severe financial hardship. Rent is considered living expenses. He will need to check with his super fund about the rules, and whether his super fund permits early release.
Note: The rules for severe financial hardship are quite strict and require the applicant to be a recipient of Commonwealth income support payments, typically Centrelink benefits but can be other income support benefits. For more information on accessing super early due to severe financial hardship see SuperGuide article Can I access my super early due to financial hardship?
If your tenant doesn’t satisfy the rules for ‘severe financial hardship’ then your tenant might consider contacting the Department of Human Services, to find out if there any scope to access super benefits early on ‘compassionate grounds’ (see the compassionate grounds in the extract at the end of the article). The Department of Human Services (DHS administers claims for early release on compassionate grounds) has some discretion to release super benefits where circumstances are consistent with the specified compassionate grounds (see sub-regulation 6.19A (1) (f) of the Superannuation Industry (Supervision) Regulations 1994 in extract at end of article).
Note: One of the specified ‘compassionate grounds’ covers those Australians who are at risk of losing their homes due to mortgage default. The Department of Human Services website states that providing releasing super benefits to provide mortgage assistance where a bank is going to foreclose on a person’s principal place of residence, does not cover the situation where a person is in rental arrears.
The rules for ‘compassionate grounds’ make no mention of a tenant being at risk of eviction, but the DHS has a discretion to provide access to super where ‘the release is consistent with a ground mentioned in’ the regulations (see extract of regulations at the end of this article). One could argue that the risk of eviction due to rental arrears comes under the broader discretionary powers available to DHS, and is consistent with the ground that a person is going lose their principal place of residence (due to foreclosure of mortgage). In other words, it could be argued that losing your house due to rental arrears is consistent with losing your house due to mortgage arrears, and accordingly should come under the DHS discretionary powers.
Important: I have set out the regulation below, but we strongly recommend that you contact the Department of Human Services to confirm your situation, and remember to mention Regulation 6.19A, paragraph (1)(f).
For more information on ‘compassionate grounds’ see the SuperGuide article Accessing super early on ‘compassionate grounds’ or visit the relevant section of the Department of Human Services website (see Early Release of Superannuation from DHS website).
Regulation 6.19A Release of benefits on compassionate grounds
(1) A person may apply to the Regulator for a determination that an amount of the person’s preserved benefits, or restricted non-preserved benefits, in a superannuation entity may be released on the ground that it is required:
(a) to pay for medical treatment or medical transport for the person or a dependant; or
(b) to enable the person to make a payment on a loan, to prevent:
(i) foreclosure of a mortgage on the person’s principal place of residence; or
(ii) exercise by the mortgagee of an express, or statutory, power of sale over the person’s principal place of residence; or
(c) to modify the person’s principal place of residence, or vehicle, to accommodate the special needs of the person, or a dependant, arising from severe disability; or
(d) to pay for expenses associated with the person’s palliative care, in the case of impending death; or
(e) to pay for expenses associated with a dependant’s:
(i) palliative care, in the case of impending death; or
(ii) death; or
(iii) funeral; or
(iv) burial; or
(f) to meet expenses in other cases where the release is consistent with a ground mentioned in paragraphs (a) to (e), as the Regulator determines.
(2) The Regulator must determine, in writing, that the person has satisfied, for the purposes of subregulation 6.18 (1) or 6.19 (1), a condition of release on a compassionate ground if the Regulator is satisfied that:
(a) the release is required on a ground mentioned in subregulation (1); and
(b) the person does not have the financial capacity to meet an expense arising from that ground.
(3) The Regulator cannot be satisfied that money is required for medical treatment unless 2 registered medical practitioners (at least one of whom must be a specialist) certify that:
(a) the medical treatment is necessary to:
(i) treat a life threatening illness or injury; or
(ii) alleviate acute, or chronic, pain; or
(iii) alleviate an acute, or chronic, mental disturbance; and
(b) the treatment is not readily available to the person, or the dependant, through the public health system.
(4) The Regulator cannot be satisfied that money is required for medical transport unless the medical treatment for which the medical transport is required has been certified, under subregulation (3), as necessary for a reason mentioned in paragraph (3) (a).
(5) The Regulator cannot be satisfied that money is required on the ground mentioned in paragraph (1) (b) unless the person gives to the Regulator a written statement from the mortgagee that:
(a) payment of an amount is overdue; and
(b) if the person fails to pay the amount, the mortgagee will:
(i) foreclose the mortgage on the person’s principal place of residence; or
(ii) exercise its express, or statutory, power of sale over the person’s principal place of residence.
(6) A statement under subregulation (5) must include the following information:
(a) the amount that is equal to 3 months’ repayments under the mortgage; and
(b) the amount that is 12 months’ interest on the outstanding balance of the loan at the time the statement is made.
(7) In this regulation:
“medical transport” means transport, for medical attention, by land, water or air.