Super dental issues

Last year, 9,700 individuals applied for compassionate release of super for dental treatment expenses, and 82% were approved. Out of those approved, 9% were for a dependent child’s dental treatment, which also included the costs of braces.

While normally superannuation must be preserved for retirement,  there are limited exceptions. One such exception is accessing your super on compassionate grounds. In this case, an individual can apply to the Australian Taxation Office (ATO) for a determination to release a portion of their preserved benefits or restricted non-preserved benefits from their fund on the grounds of lacking financial capacity.

(a) to pay for medical treatment (defined as life-threatening illnesses or to alleviate acute or chronic pain or mental disturbance or medical transport for the person or a dependant)

(b) to enable payments to prevent foreclosure by a mortgagee or the exercise of an express or statutory power of sale over the family home

(c) to pay for home and vehicle modifications to accommodate the special needs of a severely disabled person or dependant

(d) to pay for expenses associated with the person’s palliative care, death, funeral or burial, or

• to meet expenses in other cases where the release is consistent with items (a) to (d).

Where one of these conditions is met, the benefit must be released as a single lump sum not exceeding the amount that is determined by the ATO to be reasonably required, based on the nature of the hardship and the person’s financial capacity. The ATO must provide a copy of its written determination to both the individual applicant and the trustee of their superannuation fund.

Not all dental treatment is eligible as medical treatment

Going back to dental treatment, the applicable release condition would be (a), which requires the applicant to provide evidence that they are experiencing acute or chronic pain that requires dental treatment to alleviate, and that they do not have the financial means to pay for it. To support their application, the applicant would need to provide documentation from their dentist to confirm their condition, as well as proof of their financial situation to the ATO.

The ‘acute or chronic pain’ requirement means that cosmetic procedures such as teeth whitening, dental veneers, dental bonding, dental implants, dental bridges, dental crowns/tooth caps, orthodontics, and white tooth fillings are all unlikely to qualify.

There is no lifetime limit on the number of applications that you can make. For example, if you had three children who all required braces, then potentially you could tap into your super for each child’s procedure. Before making an application, individuals should consider:

• alternative funding sources, such as loans

• the impact on your retirement savings, noting the compounding nature of superannuation investments. Each time you dip into your super, you’re killing off the power of compound interest. Instead of braces costing $7000 or more, compounding interest means that it may be several multiples of this by the time you retire.

Talk to an expert

Your superannuation is likely to be one of your most significant investments. It is highly recommended that you consult a financial advisor before considering the release of your superannuation. Our team of in-house accountants and financial advisors can provide proactive solutions tailored to your individual and business needs. Book a free chat today.