Early release of superannuation form dhs

Not all super funds allow early access to your super on either severe financial hardship or compassionate grounds. Check with them first.
If they do not allow early access, and you have considered all of your options (including loss of insurance cover) and access is appropriate – you can switch funds and then apply for early access.

AM I ELIGIBLE?

To get your super released early, you must:

meet a compassionate ground (apply to the Australian Taxation Office (ATO)) (see below); and/or
have a terminal medical condition (apply to your superfund); and/or
temporarily or permanently incapacitated (apply to your superfund); and/or
have less than $200 in super (apply to your superfund); and/or
be in severe financial hardship (apply to your superfund) (see below); and/or
be a temporary resident leaving Australia for good (apply to your superfund).

You can apply for early release of super to help your partner, child or other dependant. It must be for compassionate grounds.

From 1 July 2018 responsibility for the administration of the early release of super on compassionate grounds transferred from DHS to the ATO. You will be required to have a MyGov account to complete the process.

1. ACCESSING YOUR SUPER ON A SPECIFIED COMPASSIONATE GROUND

To be eligible to access your super on compassionate grounds you must: A. Generally, show funds are required to pay:

for medical treatment or medical transport for you or dependant;
a loan to prevent your home being sold (usually by the lender or local council) (“mortgage assistance”) (see below for further information and find out more about Mortgage Stress);
to modify your home or motor vehicle to accommodate for the special needs of you or a dependant arising from a severe disability;

medical – to pay for treatment or travel to treatment;
mortgage – to stop the bank from selling your home;
disability – to modify your home or car;
palliative care – for yourself or a dependant; or
funeral costs– for a dependant.

B. Demonstrate you lack financial capacity to pay for the expense without accessing superannuation. To apply to access your super on compassionate grounds you will need to:

Contact your super fund and check that they will release your super on compassionate grounds if approved by the ATO and ask what identity documents you need.

If they do, apply to ATO by:

using the online form. You will need to create a MyGov account at my.gov.au to access the online form.
collect quotes and unpaid invoices for the amounts you need; collect documents to prove you need the money – these are different for each compassionate ground (see the ATO website for details); and
submit your application form and supporting documents to the ATO.

If the ATO approves the application you will be notified in your MyGov Inbox. The ATO will also send the approval to your super fund.

If your application is approved, you must contact your super fund to arrange release of your money. You will need to provide the super fund with a copy of the approval letter to process your payment.

It can take the ATO up to 14 days to either accept or deny your application.

If your super fund will not release your super on compassionate grounds you may consider transferring to a fund that will.

If the ATO refuses your application

If the ATO refuses your application, you only have 14 days to seek a review. If your application was not approved because the ATO states they did not get all the required supporting documents or you have new information, then you need to submit a new application (not a review).

2. ACCESSING YOUR SUPER DUE TO SEVERE FINANCIAL HARDSHIP

To be eligible to access your super due to severe financial hardship – before you reach your preservation age – you must:

be unable to pay reasonable and immediate family living costs; and
have been in receipt of 26 weeks continuous eligible income support Centrelink benefits

The minimum amount that can be paid is $1,000 (unless your super balance is less than $1,000) and the maximum amount is $10,000. It will be paid as a lump sum. You can only make one withdrawal from your super because of severe financial hardship in any 12 month period.

To be eligible to access your super due to severe financial hardship, after you have reached your preservation age, you must:

still be out of retirement (i.e. working, looking for work and/ or you must not have notified the ATO you have retired); an
have been in receipt of 39 weeks continuous eligible income support Centrelink benefits since you reached your preservation age. There is no restriction on the amount you can withdraw after you have reached your preservation age.

To apply to access your super on grounds of financial hardship you will need to:

1. set out the cause of your severe financial hardship;

2. specify how you will spend the money if it is released. If there are specific bills that need to be paid, the fund will often require you to provide copies;

3. provide evidence of yours and your family’s income and expenditure;

4. show you are in arrears, not just that you have debts, and

5. provide your super fund with a letter from DHS or Centrelink showing you in receipt of continuous eligible income support payments. This letter is called a Q230 Financial Hardship letter.

If the super trustee is not satisfied that the super will alleviate your financial hardship then they may decline to release the funds.

Mortgage assistance is available to prevent your mortgage lender or local council taking action to sell your home for mortgage arrears or unpaid rates. Access to your super should only be considered if all other options have been exhausted. Even then, caution needs to be taken as you should be very certain you can pay your normal mortgage payments after your super is released. If you cannot, you need to consider selling your home as you risk the super you have withdrawn and your house.

If you are going to sell your house anyway you should not access your super. Again, this will simply result in you losing your super, your house and the taxed portion of the released super (which will go to the ATO).

How to apply to release my super for Mortgage in arrears or Council rates.

Step 1

Speak to your home lender’s hardship department or your local council. Negotiate a hardship arrangement. Even if you are applying for your super you still need to negotiate a hardship arrangement while you do this. Speak to a financial counsellor (call the National Debt Helpline on 1800 007 007) or get advice about all options available to you.

Step 2

Contact your super fund and check that they will release your super on compassionate grounds if approved by ATO.

Step 3

You will need a letter from your lender, council or other creditor on its letterhead to give to the ATO which:

is dated;
is no more than 30 days old from the date you submit it.
states:
there’s an overdue amount;
the lender will sell your home if you don’t pay it;
the address of the home;
the total amount for three months of loan repayments;
the total amount for the next 12 months of loan interest;
the lender’s name; and
the bank account number of the loan.

NOTE

If you intend to sell your property, it is unlikely ATO will agree to the release. If you have your property on the market to sell as an alternative option in the event that ATO does not approve your application for release, you should provide a statutory declaration with your application stating that you intend to take the property off the market once the super is released. You should not swear false statutory declarations, as this may amount to an offence.

Before applying for the release of your super, you should try to negotiate with your lender or council for a repayment arrangement potentially capitalising the arrears (that is, add it to your loan balance and let you pay it off over time). This may avoid the need of having to apply for your super at all. It is also recommended you see a free financial counsellor.

How much Super can be release on the ground of Mortgage Hardship?

The maximum that can be released in a 12 month period is equal to three months repayments plus twelve months interest on the outstanding balance of the loan. However, If the amount you need is more than you have in super, you’ll need to either:

reduce the arrears; or
provide a letter from the lender confirming they will accept the amount available in super to stop the sale of the home; or
consider other options, for example, selling your home or another asset.

Step 4

Submit your application to the ATO with supporting documentation using the my.gov.au website. When applying for release on the grounds of mortgage hardship:

1. the property under threat must be your principal place of residence (not your holiday home or investment property). If you are not living in the property you should get legal advice.

2. the person applying for the release of super must also be the debtor (or one of the debtors) and responsible for making the mortgage repayments or council rates. Super will not be released to pay a mortgage in another person’s name, unless it is your principal place of residence.

3. you must have no other financial means to repay the arrears such as savings or selling another asset. You should speak to a financial counsellor or get legal advice.

Step 5

Keep making your repayments or the amount agreed under your hardship arrangement because if your arrears exceed the amount available in your super, your application may be declined or your lender may still exercise their rights to repossess your home (because the super obtained is not sufficient to cover the arrears).

You should continually keep your lender up to date as to the progress of your application.

You should also ensure that the lender does not take legal action while you are waiting as the legal fees may be added onto your loan account further increasing your arrears. If you receive a statement of claim (or summons) commencing legal proceedings, you need to lodge a complaint in your lender’s external dispute resolution scheme immediately! See our Financial Hardship Factsheet.

Step 6

If the ATO approves the release, you will need to send the original ATO letter to your super fund. You will also need to comply with your super fund’s requirements. This may include a separate form and identification verification.

Step 7

Pay the money to the lender. Sometimes your super will be released to you directly and not to the lender. You should make sensible decisions as to where the money should be paid. If you can save your home and even make a few payments in advance, you should onsider doing so. If your lender says the money is not enough and they will proceed to repossess and sell the property regardless, you should consider putting some money aside for rent and bond on an alternative place to live. If you are not sure, speak to a financial counsellor or get advice.

HOT TIP

Do not make promises that the super will be released by a certain date. You are not in control as to how fast the ATO will process your application, or how long your super fund will take after that. Your application may get delayed for any number of reasons. You do not want to breach an agreement for things outside of your control.