In general, if a member of a Self-managed Superannuation Fund (SMSF) is suffering from a severe medical condition and they do not have the funds available for treatment, they may apply to have some of their superannuation released to pay for medical expenses, on the basis of compassionate grounds.
Understandably there are specific conditions which must be met, including approval from the Department of Human Services.
The situation referred to in the article related to a formerly obese woman who was granted approval to withdraw funds to have life saving surgery – given that she has more than halved her weight, and reduced her risk of diabetes, cancer and hypertension (all of which she was pre-disposed), I have no problem with this.
However, the taxpayer subsequently made an additional withdrawal to pay for cosmetic surgery related to the dramatic weight loss…this I do not agree with.
The NTAA have discussed the matter with the Australian Taxation Office (ATO), and I understand they are reviewing the situation with the taxpayer and the trustee of the SMSF – if it is found that these funds were incorrectly accessed, then penalties will most likely apply.
If you are a member or trustee of a SMSF, please ensure you seek adequate advice in relation to the early release of superannuation – it’s in your best interests!
Note: The Tax Chic is not a registered specialist in SMSF, but if you require expert advice I can put you in touch with someone who can help.