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 early to a fund member, if the fund member has a terminal medical condition.
According to the super 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 24 months of the date of certification. (Before July 2015, the timeframe was only ‘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 to super benefits due to terminal illness is available from any super fund, including a self-managed super fund. No tax is payable on the super benefit when paid to the affected fund member. For more information on the terminal illness condition of release, see SuperGuide article Accessing super early: Terminal illness.
ATO recommendation for SMSFs: If a member of an 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 an 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 SMSF account before making a payment under this condition of release.
Accessing super for palliative care
Alternatively, you can apply to the Department of Human Services (DHS) 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 medical condition. This kind of care is often referred to as ‘palliative care’.” You can find more information on the compassionate grounds for early release in the SuperGuide article Accessing super early on ‘compassionate grounds’. Tax may be payable if applying on compassionate grounds other than terminal illness.