Early Release of Super on Compassionate Grounds

Q: What are the tax implications of early super release?

Terminal illness early release: Tax-free, regardless of age. This is one of the few circumstances where a super payment to someone under 60 is not taxed. Compassionate grounds release: Taxed as income. Depending on the amount and your other income in that financial year, this could push you into a higher tax bracket. A financial adviser or accountant can help you time applications to minimise tax. Death benefits: If the account holder dies before making a claim, the super balance will be paid as a death benefit to the nominated beneficiary. Taxation of death benefits depends on who receives the money and the tax components of the balance. This is an important distinction -- applying while alive is almost always more tax-efficient.

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Home›Living with terminal illness Living with terminal illness Superannuation early release on compassionate grounds Superannuation can normally only be accessed at retirement, but a terminal illness changes that. This guide explains the two main pathways for early access -- compassionate grounds and terminal illness -- and how to apply through the ATO or your super fund. Reviewed by Pierre Legrand, founder of 18December Published 12 June 2026 General information only. This guide is not medical, legal, or financial advice and does not create a professional relationship. Laws and medical standards vary by state and territory. Always seek advice from a qualified professional for your specific circumstances. Superannuation exists to fund your retirement. The rules that govern it are built around that purpose, and normally you can't touch it until you reach your preservation age and retire. A terminal diagnosis changes what's possible. There are two separate pathways that allow early access to super when someone has a terminal illness. They work differently, and you may be able to use both. What is the terminal illness early release pathway? This is the most significant pathway. If a person has been diagnosed with a terminal illness and two medical specialists have certified that they are likely to die within 24 months, the super fund can release the entire account balance as a tax-free lump sum. The two specialists must include at least one who specialises in the relevant medical area. They complete certification forms confirming the diagnosis and prognosis. Once the fund receives the certification, the release is usually processed within a few weeks. The money goes directly to the person with the diagnosis, not to their estate or beneficiaries. This is separate from life insurance inside super. You can apply for both the terminal illness early release of the super balance AND any life insurance or TPD claim on the same account. To apply, contact your super fund directly and ask for the terminal illness early release process. Each fund has its own forms, but the certification requirement is standard across all regulated funds. What is the compassionate grounds release pathway? Compassionate grounds is a separate, smaller release mechanism. It doesn't require a terminal prognosis -- it applies to specific, defined situations where someone needs money for essential expenses they can't afford any other way. The grounds most relevant during a serious illness are: Medical treatment -- to pay for treatment that is not available through the public health system and has been approved by a treating specialist Medical transport -- to pay for transport to access that treatment Palliative care -- to pay for palliative care for yourself or a dependent Modifications to home or vehicle -- to accommodate a disability caused by the illness Compassionate grounds release is administered by the ATO, not by the super fund. You apply through myGov, and the ATO assesses eligibility. If approved, the ATO instructs your super fund to release the specified amount. The amount released is limited to what's needed for the specific expense. It is taxed as income (unlike the terminal illness release, which is tax-free), so factor this in when planning. You can apply for compassionate grounds release multiple times for different qualifying expenses. How do I apply through the ATO for compassionate grounds release? Log in to myGov and select the ATO service. Under "Super", look for "Early access to your super". Select "Compassionate grounds". You'll need to provide: Details of the expense (cost, provider, date) Supporting documentation (invoice, specialist letter, treating doctor's confirmation) Bank account details The ATO generally processes applications within a few weeks. If the application is approved, they notify your super fund directly. If you don't have a myGov account or need help applying, call the ATO on 13 10 20 or visit ato.gov.au. How do I apply to my super fund for terminal illness release? Contact each fund directly and ask for their terminal illness claims process. You'll need: Completed terminal illness certification from two qualified medical specialists Your member details Bank account details for the lump sum payment Some funds have a dedicated claims team for serious illness. Ask for that team specifically, as they're often better equipped to move things quickly. If the person with the diagnosis has multiple super accounts, consider applying to each fund separately. Each account is assessed independently. What are the tax implications of early super release? Terminal illness early release: Tax-free, regardless of age. This is one of the few circumstances where a super payment to someone under 60 is not taxed. Compassionate grounds release: Taxed as income. Depending on the amount and your other income in that financial year, this could push you into a higher tax bracket. A financial adviser or accountant can help you time applications to minimise tax. Death benefits: If the account holder dies before making a claim, the super balance will be paid as a death benefit to the nominated beneficiary. Taxation of death benefits depends on who receives the money and the tax components of the balance. This is an important distinction -- applying while alive is almost always more tax-efficient. What if I have superannuation in multiple funds? Run a check through myGov to find all super accounts linked to the tax file number. It's common for people to have funds they've forgotten about from previous employers. Each account can be released separately under the terminal illness pathway. There's no rule that limits you to one fund. For accounts with small balances that were opened through past employment, check whether any insurance cover is attached before claiming the balance. Some older accounts have retained group insurance that may be worth claiming first. Where do I get help with this process? This process can feel overwhelming, especially when you're managing everything else at once. A financial adviser with experience in super can help you understand the full picture, including any insurance attached to the accounts, the tax implications of different pathways, and how to coordinate with the estate planning process. If cost is a concern, some community organisations and financial counselling services provide free advice on super access. The National Debt Helpline (1800 007 007) can also point you in the right direction. Keep track as you go One place for every account and contact The account register keeps a list of accounts, services, and the people to notify, so your family is not searching through paperwork later. It is part of a subscription, and you can start with a free account. Platform tools Your checklistEvery task across all five stages of the journey, gathered in one place so nothing is forgotten. Document vaultStore the will, power of attorney, advance care directive, and other important documents securely in your account. Available to members. Related guides Make memories.Managing medications at home Palliative care Parking at hospitals Preparing your partner to manage finances independently Voluntary Assisted Dying Was this guide helpful? Pierre Legrand Founder, 18December Pierre started 18December after his partner Mark was given a terminal diagnosis, when they mapped out everything that needed to happen at the kitchen table. He reviews the guides to keep them honest, plain, and genuinely useful. About 18December Published 12 June 2026 Read the latest version of this guide at www.18december.com.au/guides/super-early-release-compassionate-grounds © 2026 18December Pty Ltd. All rights reserved. This guide is original content and may not be reproduced, distributed, or republished without written permission. ← Back to Living with terminal illness On this page What is the terminal illness early release pathway?What is the compassionate grounds release pathway?How do I apply through the ATO for compassionate grounds release?How do I apply to my super fund for terminal illness release?What are the tax implications of early super release?What if I have superannuation in multiple funds?Where do I get help with this process? 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Superannuation can normally only be accessed at retirement, but a terminal illness changes that. This guide explains the two main pathways for early access -- compassionate grounds and terminal illness -- and how to apply through the ATO or your super fund.

Reviewed by Pierre Legrand, founder of 18December

Published 12 June 2026

General information only. This guide is not medical, legal, or financial advice and does not create a professional relationship. Laws and medical standards vary by state and territory. Always seek advice from a qualified professional for your specific circumstances.

Superannuation exists to fund your retirement. The rules that govern it are built around that purpose, and normally you can't touch it until you reach your preservation age and retire.

A terminal diagnosis changes what's possible. There are two separate pathways that allow early access to super when someone has a terminal illness. They work differently, and you may be able to use both.

What is the terminal illness early release pathway?

This is the most significant pathway. If a person has been diagnosed with a terminal illness and two medical specialists have certified that they are likely to die within 24 months, the super fund can release the entire account balance as a tax-free lump sum.

The two specialists must include at least one who specialises in the relevant medical area. They complete certification forms confirming the diagnosis and prognosis.

Once the fund receives the certification, the release is usually processed within a few weeks. The money goes directly to the person with the diagnosis, not to their estate or beneficiaries.

This is separate from life insurance inside super. You can apply for both the terminal illness early release of the super balance AND any life insurance or TPD claim on the same account.

To apply, contact your super fund directly and ask for the terminal illness early release process. Each fund has its own forms, but the certification requirement is standard across all regulated funds.

What is the compassionate grounds release pathway?

Compassionate grounds is a separate, smaller release mechanism. It doesn't require a terminal prognosis -- it applies to specific, defined situations where someone needs money for essential expenses they can't afford any other way.

The grounds most relevant during a serious illness are:

Medical treatment -- to pay for treatment that is not available through the public health system and has been approved by a treating specialist
Medical transport -- to pay for transport to access that treatment
Palliative care -- to pay for palliative care for yourself or a dependent
Modifications to home or vehicle -- to accommodate a disability caused by the illness

Compassionate grounds release is administered by the ATO, not by the super fund. You apply through myGov, and the ATO assesses eligibility. If approved, the ATO instructs your super fund to release the specified amount.

The amount released is limited to what's needed for the specific expense. It is taxed as income (unlike the terminal illness release, which is tax-free), so factor this in when planning.

You can apply for compassionate grounds release multiple times for different qualifying expenses.

How do I apply through the ATO for compassionate grounds release?

Log in to myGov and select the ATO service. Under "Super", look for "Early access to your super". Select "Compassionate grounds".

You'll need to provide:

Details of the expense (cost, provider, date)
Supporting documentation (invoice, specialist letter, treating doctor's confirmation)
Bank account details

The ATO generally processes applications within a few weeks. If the application is approved, they notify your super fund directly.

If you don't have a myGov account or need help applying, call the ATO on 13 10 20 or visit ato.gov.au.

How do I apply to my super fund for terminal illness release?

Contact each fund directly and ask for their terminal illness claims process. You'll need:

Completed terminal illness certification from two qualified medical specialists
Your member details
Bank account details for the lump sum payment

Some funds have a dedicated claims team for serious illness. Ask for that team specifically, as they're often better equipped to move things quickly.

If the person with the diagnosis has multiple super accounts, consider applying to each fund separately. Each account is assessed independently.

What are the tax implications of early super release?

Terminal illness early release: Tax-free, regardless of age. This is one of the few circumstances where a super payment to someone under 60 is not taxed.

Compassionate grounds release: Taxed as income. Depending on the amount and your other income in that financial year, this could push you into a higher tax bracket. A financial adviser or accountant can help you time applications to minimise tax.

Death benefits: If the account holder dies before making a claim, the super balance will be paid as a death benefit to the nominated beneficiary. Taxation of death benefits depends on who receives the money and the tax components of the balance. This is an important distinction -- applying while alive is almost always more tax-efficient.

What if I have superannuation in multiple funds?

Run a check through myGov to find all super accounts linked to the tax file number. It's common for people to have funds they've forgotten about from previous employers.

Each account can be released separately under the terminal illness pathway. There's no rule that limits you to one fund.

For accounts with small balances that were opened through past employment, check whether any insurance cover is attached before claiming the balance. Some older accounts have retained group insurance that may be worth claiming first.

Where do I get help with this process?

This process can feel overwhelming, especially when you're managing everything else at once.

A financial adviser with experience in super can help you understand the full picture, including any insurance attached to the accounts, the tax implications of different pathways, and how to coordinate with the estate planning process.

If cost is a concern, some community organisations and financial counselling services provide free advice on super access. The National Debt Helpline (1800 007 007) can also point you in the right direction.

Platform tools

Your checklistEvery task across all five stages of the journey, gathered in one place so nothing is forgotten.
Document vaultStore the will, power of attorney, advance care directive, and other important documents securely in your account. Available to members.

Was this guide helpful?

Pierre Legrand

Founder, 18December

Pierre started 18December after his partner Mark was given a terminal diagnosis, when they mapped out everything that needed to happen at the kitchen table. He reviews the guides to keep them honest, plain, and genuinely useful. About 18December