When you’re facing unexpected medical bills, accessing your superannuation early on compassionate release grounds can feel like a lifeline. But recent warnings from the ATO, alongside health regulators, highlight emerging concerning practices that could leave you in serious financial and legal trouble.
What’s Happening?
- False or inaccurate medical reports supporting ineligible applications (e.g., for cosmetic procedures)
- Practitioners recommending high-cost or unnecessary treatments
- Use of patients’ myGov login details to lodge applications, a serious privacy breach
- Unregistered individuals charging fees to assist with applications
- Financial advice provided without an Australian Financial Services (AFS) licence
Red flags to watch out for
The Australian Health Practitioner Regulation Agency (AHPRA) and medical boards have identified “deeply concerning” reports of financial harms experienced by patients using significant amounts of superannuation to fund treatments. Be alert to these warning signs: telehealth consultations when physical examinations should be required; requests for upfront payments; expensive treatment recommendations when cheaper alternatives exist; aggressive sales tactics or limited cost information; or practitioners asking for your myGov login details.
What qualifies for compassionate release?
Medical treatment must meet specific eligibility conditions: you or your dependant must require the treatment to treat a life-threatening illness or injury, alleviate acute or chronic pain, or alleviate acute or chronic mental illness. Additionally, the treatment must not be readily available through the public health system. Medical treatments undertaken solely with cosmetic intent wouldn’t normally qualify for compassionate release of super; for example, dental treatments like cosmetic veneers typically don’t meet these strict requirements.
Consequences
If the ATO discovers your approved application included false information or documents, you could face: cancellation of your approval; additional income tax obligations; tax shortfall penalties for making false or misleading statements; and interest charges on any shortfall. These penalties can also apply to health practitioners who make false or misleading statements in medical reports. The ATO may prosecute anyone promoting illegal super access schemes, potentially resulting in both civil and criminal penalties, including fines or imprisonment.
Protect yourself and your super
Your superannuation is designed to support you in retirement. While compassionate release exists as an important safety net for genuine medical emergencies, it’s crucial to ensure you’re working with ethical practitioners who have your best interests at heart. Practitioners are expected to put the best interests of their patients first, providing treatment options based on the best available information and not influenced by financial incentives or gain. They should be honest in their reports and ensure you understand all costs and risks before treatment begins. If you encounter suspicious practices, you can report concerns anonymously through the ATO website or app; or contact AHPRA or the relevant health complaints authority or ombudsman in your state or territory.
Speak to one of our accountants if you have any questions about the changes in tax for 2025.
