• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • Join SuperGuide Premium
  • Account
  • Log In
  • Join SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / How super works / Accessing super / Early release of super / Early release of super due to a terminal medical condition

Early release of super due to a terminal medical condition

February 25, 2019 by SuperGuide Leave a Comment

Reading time: 3 minutes

On this page

  • What is the definition of a terminal medical condition?
  • Other reasons for early release of super
  • How do you apply for early super release due to the diagnosis of a terminal medical condition?
  • Do the rules differ if you have an SMSF?
  • What are the tax implications?
  • The bottom line

Australian super law allows for the full early release of your super if you’re diagnosed with a terminal medical condition, provided your super fund allows it. If your fund doesn’t allow for this type of release, you may be able to transfer your super to one that does.

Normally you can only access your super once you’ve reached your preservation age and met a condition of release (such as retiring from the workforce or turning 65). Your preservation age is between 55 and 60, depending on your date of birth.

However, these super release conditions can be waived if you’re diagnosed with a terminal medical condition.

What is the definition of a terminal medical condition?

Under Australian super law, you have a terminal medical condition when two medical practitioners have certified that you have an illness or injury that will result in your death within 24 months of the date of the certificate. At least one of these medical practitioners must be a specialist in the area of your terminal illness or injury.

You can choose to access all or some of your super due to being diagnosed with a terminal illness, subject to the rules of your fund. There are no legal restrictions on the amount you can access, but withdrawals must be taken as lump sums.

Other reasons for early release of super

You can find all the ways that you can access your super here, or continue reading for other conditions of release that can intersect with terminal medical conditions.

Compare super funds

Read more...

Advertisement

Compassionate grounds

Accessing your super early due to being diagnosed with a terminal medical condition is  different from accessing it on ‘compassionate grounds’ (which is another potential way that super can be accessed early under Australian law). It’s important to understand the difference between these two categories because there are different payment terms and conditions.

The major difference is that the amount you can access early on compassionate grounds is limited to an amount to cover the following unpaid expenses:

  • Your medical treatment or transport for your terminal illness.
  • A mortgage or council rates payment to prevent you from losing your home.
  • Home or vehicle costs to accommodate a disability (for example, one associated with your terminal illness).
  • Paying for your palliative care.
  • paying for the death, funeral or burial expenses of a dependant.

In contrast, there are no restrictions on the amount of you super you can access early if you’re diagnosed with a terminal medical condition, and there are also no restrictions on how you can spend those early release funds.

Permanent or temporary incapacity

If you’re diagnosed as being temporarily or permanently incapacitated you can be eligible for insurance benefits through your super fund if you have this coverage, rather than withdrawing any or all of your super balance early.

How do you apply for early super release due to the diagnosis of a terminal medical condition?

You can apply to your super fund for an early release payment if you’re diagnosed with a terminal medical condition. You’ll need to provide two medical certificates confirming the diagnosis, as described earlier in this article.

Do the rules differ if you have an SMSF?

No. SMSF trustees are legally obliged to ensure that two medical certificates are provided by a member when applying to access their super early due to a terminal medical condition.

It’s important to understand that the Australian Taxation Office (ATO) can impose severe penalties on SMSF trustees for the illegal and/or unauthorised early release of super funds. These penalties can include very heavy fines (up to $420,000 for individual trustees and up to $1.1 million for corporate trustees), and/or up to five years imprisonment.

What are the tax implications?

If you’re diagnosed with a terminal illness, your super funds can be accessed tax-free anytime during your 24-month certification period. Any early super payment amounts you receive don’t need to be included on your tax return.

You may also be eligible for a refund on any tax that may have been withheld by your super fund from the time you were diagnosed until you receive your payment.

If you don’t withdraw all of your super and you survive beyond your 24-month certification period, you can still access your funds. However, they may not be tax-free unless you get an updated certificate.

The bottom line

Being diagnosed with a terminal medical condition is heart-breaking news. However, your early access eligibility for your super can help you and your dependants to cope financially. It’s worthwhile to seek independent professional advice on how to best use your super funds to provide for yourself and your dependants.

The information contained in this article is general in nature.

Compare super funds

Read more...

Advertisement

Learn more about accessing super early in the following SuperGuide articles:

Your tax guide to accessing your super under age 60

July 16, 2020

Early release of super due to severe financial hardship

April 4, 2020

Early release of super on compassionate grounds

April 1, 2020

Early release of super through DASP (Departing Australia Superannuation Payment)

March 8, 2019

Related topics

Accessing super Early release of super How super works

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

© Copyright SuperGuide 2009-21. Copyright for this article belongs to SuperGuide Pty Ltd, and cannot be reproduced without express and specific consent. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Join SuperGuide Premium and give your retirement plans a boost.

Get access to independent expert commentary on the latest super, retirement and SMSF issues, including the top performing super and pension funds, how much super is enough, the latest super rates and thresholds and new super measures and strategies.

You’ll have access to more than 600 articles, how-to super guides, checklists, tips, calculators, reckoners and other tools, as well as a monthly newsletter.

Find out more

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap