News / Aug 30, 2021

Can you pay medical expenses with super?

Duc Hong
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Life can take an unexpected turn when members of an SMSF suddenly find themselves in need of medical treatment which they cannot afford with their personal savings. Can you pay medical expenses with super?

Yes… but, only if you meet certain conditions

Applications can be made to the ATO under compassionate grounds for those needing funds to pay for the following:

  • Medical treatment and medical transport;
  • Modifying a home or vehicle to accommodate a disability,
  • Palliative care;
  • Funeral expenses for a dependent; or
  • Making a payment on a home loan or council rates to prevent losing their home.

The focus in this article will be on releasing super for medical treatment.

To be eligible to gain access to a member’s super for medical treatment, they must demonstrate that they cannot afford to pay their medical bills personally, by obtaining a loan or by liquidating investments. They must also demonstrate that the public health system does not offer this type of treatment and:

  • The associated medical condition is life-threatening;
  • It leads to acute/chronic pain; or
  • It leads to acute/chronic mental illness.

Further requirements apply if the member needs access to their super for IVF, dental treatment or for treatment that will occur in stages or over an extended period. These requirements are detailed on the ATO website.

More importantly, for the ATO to assess the member’s application, these medical expenses must be unpaid. The ATO will not reimburse the member after they have paid these, even if they’ve borrowed from their family members or friends. Lastly, the member has to be a permanent resident of Australia or New Zealand.

How to apply

Members can apply to the ATO online by providing two medical reports and a quote or unpaid invoice for the medical treatment. The medical reports need to be from either two registered medical specialists or one from a registered medical specialist and the other from a registered medical practitioner. Once the evidence is compiled, the application must be submitted within six months from the date of the reports and quote/invoice otherwise, new documents will need to be obtained. Upon processing the member’s application, the ATO may contact the listed providers to ensure the information provided is accurate.

What about tax implications?

If their application is approved, the amount is treated as a lump sum and therefore, the usual tax rates apply, depending on their age, with the SMSF withholding the required amount of tax.


When members are considering applying to the ATO to release super under compassionate grounds, planning ahead is important to ensure they meet the strict requirements and that there are no delays with the application. If you have clients who will be incurring high medical bills and are considering accessing their super, please don’t hesitate to contact us to discuss their options. 

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