Compassionate Release of Super

Eligibility for compassionate release of super

The ATO can only approve a release from super on compassionate grounds if a person meets all of the conditions listed below:

Condition 1

They meet the eligibility requirements of the compassionate ground they are applying for. The specific eligibility criteria are for either

  • Medical (treatment or transport)
  • Accommodating a disability
  • Palliative care for a terminal illness
  • Funeral expenses for your dependant
  • Preventing foreclosure or forced sale of home

Condition 2

They have not yet paid the expense. The ATO can only approve compassionate release of super to help with unpaid expenses. If an expense has already been paid, for example by using a loan, a credit card, or money borrowed from family or friends, the person does not meet the eligibility requirements. 

Condition 3

They can’t afford to pay part or all of the expense without accessing their super. That is, they can't pay the expense by

  • getting a loan
  • using their savings
  • selling shares, investments, or assets.

Condition 4

They are or have been a citizen or permanent resident of Australia or New Zealand.

Condition 5

They have provided all required supporting evidence and unpaid invoices or quotes.

For more information on the eligibility requirements for the following compassionate grounds: medical; accommodating a disability; palliative care for a terminal illness; and funeral expenses for your dependent, visit the Australian Government website

Preventing foreclosure or forced sale of home

The ATO has reproduced the below information about the specific eligibility requirements for what is presumably a common compassionate ground regarding preventing foreclosure or forced sale of home.

A person may be eligible for a compassionate release of super where:

  • their mortgage or council rates are in arrears, and
  • their mortgage lender or council is threatening to have their home repossessed or sold.

To be eligible, the individual must meet all of the following conditions:

  • Condition 1 – the property subject to the foreclosure or forced sale is the individual’s principal place of residence.
  • Condition 2 – the individual is legally responsible for the mortgage repayments or council rates of that property.
  • Condition 3 – the individual has received written advice that their principal place of residence is to be foreclosed, sold, or repossessed from the mortgage lender who has provided a default notice; or the council, where council rates have been outstanding for more than two years.
  • Condition 4 – the individual has no capacity to pay the money owed.

An individual is not eligible for a release:

  • if they don't own the house being foreclosed – for example, they are renting;
  • if they don’t live in the house being foreclosed – for example, an investment property;
  • if they have missed your mortgage repayments but the mortgage lender has not issued a default notice; if they have outstanding council rates, and the rates have not been outstanding for more than two years, and the council has not provided a written notice of foreclosure
  • to pay outstanding bills or debts, even if the property may be at risk of being foreclosed at some time in the future;
  • if the threatened foreclosure is due to bankruptcy or family court proceedings;
  • to pay loans relating to properties that are not the individual’s home, even if their home is at risk of being foreclosed this applies where a loan doesn't solely relate to their home.

If an individual owns multiple properties, they may not be eligible for release on compassionate grounds, as they may be able to pay their expenses by selling one or more of the property assets. When applying, they should provide documents that support why they have been unable to sell their other property assets to prevent the threatened foreclosure of their home.

Maximum release amount for mortgage foreclosure

The maximum amount an individual can request for a mortgage release within a 12-month period is referred to as the cashing restriction, which is the sum of both:

  • three months of repayments, and
  • 12 months interest on the outstanding balance of the loan.

For example, if the monthly repayments are $1,200 and 12 months interest on the loan is $9,600, the maximum that can be requested is 3 x $1,200 + $9,600 = $13,200.

If the application to prevent foreclosure from a mortgage lender is approved, the 12 month cashing restriction timeframe starts from the date the superfund releases this payment.

If an individual has more than one super fund, they can apply for a number of smaller amounts from them. However, the total amount released can only be the amount required to stop foreclosure. If they do not have enough funds to prevent the foreclosure, the ATO will not approve the release of any funds.

If more than one person is accessing their super on compassionate grounds to prevent foreclosure, the combined total amount released cannot exceed the maximum amount based on the calculation method above.

Ref: ATO Website, 5 December 2022


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