SuperSA Triple S and terminal illness tax benefits within

Superannuation can only be accessed in limited ways. Superannuation has always been designed as a mechanism to assist funding someone’s retirement. The legislation recognises people’s lives don’t always follow a simple path of working until 65 then retiring for example. Some people may not make it there and due to a terminal illness and then legislation allows those who are terminally ill, to access superannuation early.

The ATO’s definition of when you are classified as being terminally ill is “ 2 registered medical practitioners have certified, jointly or separately, that the member suffers from an illness, or has incurred an injury, that is likely to result in the member’s death within 24 months of the date of certification” (see reference here). Noting there are a few other pieces of criteria. This has to do with accessibility of superannuation and sometimes your fund may hold insurance which has a different definition – so it is important that this is looked into.

With SuperSA Triple S scheme here in South Australia, when concessional contributions get paid into the fund (i.e. from your employer) or earnings are accrued in the fund – no tax is taken out, where in the private sector world, this is usually up to 15%. The contributions and earnings stay within the fund and form an un-taxed component which the 15% tax is then paid upon exiting fund (i.e. you might retire post age 60, setup a pension and the 15% gets paid then).

In the instances of Terminal Illness, the current rulings (as long as you meet the definitions) will actually entitle you to the whole benefit tax free. From a taxation point of view (which it is important to get specific personalised advice relevant to you), it is a significant benefit versus someone who has had their superannuation in a “normal” fund who has had up to 15% taken throughout their working life on concessional contributions and earnings. This means that there is more money in the claimant’s pocket to help them at this stage in their life with their illness and/or injury.