The Australian Taxation Office (ATO) has recently warned of growing risks around inappropriate early withdrawals from superannuation, particularly to cover lifestyle expenses or non-critical medical procedures. While it may be tempting to view super as an accessible pot of money, accessing it early can carry significant risks, such as reducing your retirement savings, unexpected tax consequences, and potential severe penalties for false or misleading statements.
Superannuation is designed to fund your retirement, with your employer contributing 12% of your salary or wages into your account to grow over time. Generally, you cannot access your super until you reach preservation age or retire. However, there are a few unique situations where early access is permitted.
Early access to super is possible on compassionate grounds that fulfil specific eligibility, such as funding a life-threatening medical procedure, alleviating acute or chronic pain, or treating a serious mental illness. Even then, applications are carefully assessed, and applicants must demonstrate that no other payment options are available. Cosmetic procedures or elective treatments do not qualify.
The ATO has also raised concerns about improper advice and misleading medical reports being used to justify ineligible claims. It is important to remember that making a false or misleading application, or relying on inappropriate third-party assistance, can result in severe penalties. Furthermore, accessing super for holidays, investments, or day-to-day expenses is not permitted. Super is not ‘free money,’ it is a long-term investment in your future.
We recommend seeking professional advice before considering early access to your super under any circumstances. We can help you understand the eligibility requirements, explore alternative funding options, and ensure you don’t inadvertently jeopardise your retirement savings. If you’re facing financial challenges and want to discuss your options, please contact our team – we’re here to guide you.