Hi, I have recently been diagnosed with a terminal illness at 35 so I am looking into applying for my early super withdrawl and death benefit payout. I have a HECS debt of almost $30k but have not yet finished my degree as I changed courses halfway through. I am worried if I take out my super and death benefit that the ATO will take the 30k from my payout. I don't believe this is fair given that I can't work now and haven't been able to achieve a degree to even use in the future. If I was able to keep working but didn't earn over the threshold again, would the debt just be forgiven upon my death? Is there any possible way that I can avoid having to repay this debt out of my death benefit and super payout as this will be all I have to support myself and my health related costs for the next however many years? Are there compassionate grounds that are considered in these situations? I know that years ago all you had to do was move overseas for a few years and your debt was forgiven. I find that strange that it would not be considered in my case now. Thanks, Mel.
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1 replies
Hi @Melb088,
We're sorry to hear of your illness and hope you have plenty of support. In relation to accessing your super under a benefit paid out for a terminal illness, the payment should be tax-free and not included on your return. When we're working out your compulsory HELP repayment, the repayment income is determined from income reported on your return. This does not include a super lump sum paid out tax-free.
You can view the repayment income for HELP debt from here. You can also view how tax applies if you receive a super lump sum.
If an individual passes away the HELP debt is cancelled at the time of their death.
All replies
Hi @Melb088,
We're sorry to hear of your illness and hope you have plenty of support. In relation to accessing your super under a benefit paid out for a terminal illness, the payment should be tax-free and not included on your return. When we're working out your compulsory HELP repayment, the repayment income is determined from income reported on your return. This does not include a super lump sum paid out tax-free.
You can view the repayment income for HELP debt from here. You can also view how tax applies if you receive a super lump sum.
If an individual passes away the HELP debt is cancelled at the time of their death.
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