Using your super to pay for rehab

What compassionate release is

Superannuation is usually locked away until retirement. The law allows a small number of exceptions, and one of them is release on compassionate grounds. The Australian Taxation Office (ATO) assesses these applications. If it approves one, it tells your super fund how much can be released and for what purpose, and the fund then makes the payment.

Compassionate grounds cover a short list of specific expenses. Paying for medical treatment is one of them. You can only access what is needed to pay for the approved expense, not your whole balance.

Medical treatment for a mental disorder

In general terms, the medical treatment ground can include treatment to alleviate an acute or chronic mental disorder, for you or a dependant. Substance use disorders can sit within this, depending on the diagnosis and the treatment proposed. The ATO also looks at whether the treatment is readily available through the public health system, and whether you have other ways to pay.

Whether an application is approved is the ATO's decision, made on the evidence for each person. A treatment provider can't promise an outcome, and you should be wary of anyone who does.

What you'll need

Applications are usually made online through ATO online services, which you can reach through myGov. For medical treatment, the ATO generally asks for:

• Reports from two registered medical practitioners, one of whom must be a specialist in the relevant area, such as a psychiatrist. The reports need to support that the treatment is needed for the condition.
• A quote or invoice from the treatment provider showing what the treatment is and what it will cost.
• Details of your super fund and your identity.

Allow time for this. Booking specialist appointments, getting reports written and waiting for an ATO decision all take time, which matters if treatment is urgent. If you are applying, tell us early: we can provide a written quote and the program details your doctors may need.

Tax, in general terms

Money released early from super is generally treated as a super lump sum and may be taxed. How much tax applies depends on things like your age and how your super balance is made up. Your fund usually withholds any tax before paying the money out, so the amount you receive can be less than the amount released. Check the tax treatment on the ATO website, with your fund, or with a registered tax agent before you apply, so you know what you will actually receive.

It is also worth thinking about what the withdrawal means for your future balance, and whether it affects any insurance you hold through your fund.

Other ways to pay

Super is one option, not the only one. Sapphire's live-in program starts from $25,000 + GST, our outpatient program from $15,000 + GST, and the transition house is $15,000. Ways to spread the cost include:

• Payment plans through TLC, so the cost can be paid over time rather than up front.
• Finance, through a lender, subject to their approval and terms.
• Private health insurance. Some policies may contribute to some services. Ask your insurer exactly what your cover includes.
• Public services. Publicly funded alcohol and drug treatment is also available in Queensland, often with waiting lists. A GP or Adis on 1800 177 833 can tell you more.

You can see our programs and a simple cost calculator on the programs and pricing page.

Before you decide

• Get the provider's quote in writing, and read what is and isn't included.
• Read the ATO's current guidance yourself, rather than relying on a summary.
• Be cautious of anyone offering to "unlock" your super for a fee. Illegal early release schemes exist, and the ATO warns about them.
• If you are unsure, talk to a licensed financial adviser or a registered tax agent.