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Condition of release

Terminal medical condition

Section: 7.7

7.7 Terminal medical condition

Early release of superannuation benefits on compassionate grounds is currently governed by Regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). This sets out the circumstances in which superannuation may be released upon compassionate grounds and works in conjunction with Schedule 1 of those regulations, which sets out, for certain grounds of release, the maximum amounts and permitted frequency of release. Equivalent regulations are contained in Regulation 4.22A of the Retirement Savings Account Regulations 1997 in respect of Retirement Savings Accounts (RSAs).

Benefits may be released on compassionate grounds to meet expenses in respect of the following (for the member or the member's dependant)"

  • medical treatment
  • medical transport
  • modifications necessary for the family home or motor vehicle due to severe disability; and
  • palliative care

Funds may also be released on compassionate grounds to prevent foreclosure of a mortgage or exercise of a power of sale over the member's principal place of residence; or to pay for expenses associated with a dependant's death, funeral or burial.

In all cases in which early release of superannuation is sought on compassionate grounds, the member must satisfy the regulator that they do not have the financial capacity to meet the relevant expense (SIS Regulations 6.19A(2)(b)).

Responsibility for the administration of the early release of superannuation on compassionate grounds has changed over time. It was initially the responsibility of the Insurance and Superannuation Commission. It passed to the Australian Prudential Authority (APRA) when this body was created by the Insurance and Superannuation Commission in 1998. It was then transferred to the Department of Human Services (DHS) in 2011. The Government recently transferred responsibility for administering early release on compassionate grounds from DHS to the Australian Taxation Office. The new arrangements commenced in 2018.

Regulation 6.19A(3) describes the medical treatment that is covered. It is medical treatment that has been certified by two medical practitioners (at least one of whom must be a specialist) as medical treatment which:

a. is  necessary to treat a life-threatening illness or injury, or alleviate acute or chronic pain, or alleviate an acute or chronic  mental disturbance; and

b. is not readily available to the member or their dependant through the public health system.

Both certificates (ie of each registered medical practitioner) must therefore cover both points a. and b.

What is the meaning of 'not readily available through the public health system'?

Regulation 6.19A(3) provides that money can be released for medical treatment only if it is not readily available to the relevant person through the public health system. Depending on the nature of the illness, the waiting time for, or the availability of, the public health treatment, can be either prompt and quick or not. In one case, a three-month wait could be acceptable and in another, a 48-hour wait, unacceptable.

Source: Release of benefits on 'compassionate grounds' - The Australian Prudential Regulation Authority

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Monday, July 12, 2021