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Re: Early Release of Super - Compassionate Grounds

Newbie

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Replies 1

SMSF receives ATO Letter from a member advising release of $10,000 on Compassionate Grounds relating to medical expenses (not Covid related)

Member under 60 and lets say PAYG of $1,000 is payable.
- Does the Fund release the $10,000 and pay the $1,000 PAYG also (essentially $11,000)
- Does the Fund pay the $10,000 and the member has to pay the $1,000 PAYG on behalf of the Fund.
- Alternatively, does the Fund pay out the net of $9,000 to the member and 'retain' $1,000 to cover the PAYG.

Also - lets say the $10,000 was a quote and the total expenses were only $9,500?
- If the member took a $10,000 lump sum is that an issue?
- If the member paid multiple invoices from the Fund bank account instead of taking a single lump sum - is that an issue?

Many thanks 


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Most helpful response

Devotee Registered Tax Practitioner

Replies 0

SMSF receives ATO Letter from a member advising release of $10,000 on Compassionate Grounds relating to medical expenses (not Covid related)

Member under 60 and lets say PAYG of $1,000 is payable.
- Does the Fund release the $10,000 and pay the $1,000 PAYG also (essentially $11,000)

No  -  if $ 1,000 needs to be witheld from $ 10,000  =  net payment is $ 9,000.

Actual tax depends on member's preservation age, and the fund's tax components.

 

- Does the Fund pay the $10,000 and the member has to pay the $1,000 PAYG on behalf of the Fund.

No


- Alternatively, does the Fund pay out the net of $9,000 to the member and 'retain' $1,000 to cover the PAYG.

Yes, as above.

 

Also - lets say the $10,000 was a quote and the total expenses were only $9,500?
- If the member took a $10,000 lump sum is that an issue?

Not an issue if you have an ATO release for $ 10K


- If the member paid multiple invoices from the Fund bank account instead of taking a single lump sum - is that an issue?

Yes  -  money should be paid to member, who the uses it to pay medical bills as incurred.

 

1 REPLY 1

Most helpful response

Devotee Registered Tax Practitioner

Replies 0

SMSF receives ATO Letter from a member advising release of $10,000 on Compassionate Grounds relating to medical expenses (not Covid related)

Member under 60 and lets say PAYG of $1,000 is payable.
- Does the Fund release the $10,000 and pay the $1,000 PAYG also (essentially $11,000)

No  -  if $ 1,000 needs to be witheld from $ 10,000  =  net payment is $ 9,000.

Actual tax depends on member's preservation age, and the fund's tax components.

 

- Does the Fund pay the $10,000 and the member has to pay the $1,000 PAYG on behalf of the Fund.

No


- Alternatively, does the Fund pay out the net of $9,000 to the member and 'retain' $1,000 to cover the PAYG.

Yes, as above.

 

Also - lets say the $10,000 was a quote and the total expenses were only $9,500?
- If the member took a $10,000 lump sum is that an issue?

Not an issue if you have an ATO release for $ 10K


- If the member paid multiple invoices from the Fund bank account instead of taking a single lump sum - is that an issue?

Yes  -  money should be paid to member, who the uses it to pay medical bills as incurred.