The tax office reminded SMSF members and trustees to be aware that some advisers claim they can get early access to their super by transferring it into a SMSF, however, it warned that these schemes are illegal and there are heavy penalties if members participate.
In the lead-up to the Christmas break the ATO said that any compassionate release of super applications that are not finalised before 24 December 2025 will be actioned after its offices reopen. However, members can still submit applications over this period.
The ATO said it is important to remember that there are limited circumstances where members can access their super on compassionate grounds to meet expenses for themselves or a dependant.
Under the law, the ATO has no discretion to vary the conditions under which members can access their super early.
The office said SMSF members may be able to have super released on compassionate grounds to meet expenses for things such as medical treatment for themselves or a dependant, medical transport, modifications to home or vehicle to accommodate special needs arising from their own or a dependant’s severe disability.
Compassionate release of super is also available for palliative care for the member or a dependant’s terminal illness, death, funeral or burial expenses for a dependant and preventing foreclosure or forced sale of the member’s home.
Applications for the compassionate release of super generally need to be for an unpaid expense, however, if a member has borrowed money to pay for the expense, they may be able to access their super to repay the outstanding balance of the borrowed amount.
The regulator said that these circumstances don’t include meeting general day-to-day expenses in hardship situations and in these situations, members may be able to access their super early but there are different rules, and they need to apply directly to their fund.
The application must include all the required evidence so it can be assessed as quickly as possible. Applications that are not accompanied by all the required documentary evidence may be delayed or not approved.
The ATO also said it is important to consider the ramifications of early release of super, particularly the reduction of the member’s super balance, which may affect not just their future retirement income, but also any income protection insurance, life and total and permanent disability insurance cover, family tax benefit and child support payments.
