ATO outlines process for financial hardship requests
The ATO has advised superannuation members that severe financial hardship does not meet the grounds for compassionate release.
In an online update this week, the Tax Office said it commonly receives calls from people experiencing severe financial hardship who are looking to access their superannuation to assist with general expenses.
“Unfortunately, these circumstances do not meet the grounds for compassionate release,” the ATO stated.
“Access to superannuation for severe financial hardship can only be requested by members to their funds.”
In order to release benefits under severe financial hardship, the ATO said funds need to be satisfied that the member cannot meet reasonable and immediate family living expenses, has been receiving relevant government income support payments for a continuous period of 26 weeks, and is receiving that support at the time they applied to the trustees.
“The payment must be a single gross lump sum of no more than $10,000 and no less than $1,000 (or a lesser amount if the member's benefits are less than $1,000). Only one payment is permitted in any 12-month period,” the Tax Office stated.
Alternatively, if the member has reached their preservation age plus 39 weeks, the super fund needs to be satisfied that the member has been receiving relevant government income support payments for a cumulative period of 39 weeks since reaching their preservation age and was not gainfully employed on a full-time or part-time basis at the time of applying to the trustees, said the ATO.
“If a fund releases benefits under these circumstances, there are no cashing restrictions.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
