Tax free Super for the terminaly ill.
It is a subject we rarely want to deal with but unfortunately many of us will become terminally ill before we reach 65 years of age. Only those who are going through this situation or whose family members are can fully understand the pain and difficulties a terminal illness brings to the patient and his loved ones.
It might be of little comfort to the patient but thanks to a new tax amendment (2008 Measures No. 2) Act 2008, super members that are terminally ill will not have to pay tax when they cash their super fund early. I guess dying is the only way of cheating the tax man out of a buck.
On a more serious note, this tax break can be of great help to people in such a terrible situation. They can help to increasing the quality of life if special care or conditions are required due to the illness. It can also provide help to the family and mitigate the great expenses often associated with terminal illnesses.
There is no question these tax breaks will help and be of great interest to the super fund member and his loved ones. The question we are more interested in is how can we make sure we make the most out of this tax break.
The devil is, as they say, in the detail. The fly in the ointment of the tax break is that it will apply only to payments made from 1 July 2007, previous payments will be taxed under the previous regulations.
As described in the above mentioned Tax Law Amendment there will be a new condition of release for super fund members, a terminal medical condition.
What is meant by terminal medical condition?
A member is terminally ill if two doctors, one of them being a specialist certify that the person has an illness or has suffered an injury that is likely to cause death within a 12 month period. It sounds obvious, but it is part of the requirement that the certification period of 12 months cannot have already gone by when claiming the super fund.
This change in Australian Tax Law will help ailing and suffering people with a little extra peace of mind and the financial help they need. If you are currently undergoing this or a similar circumstance get in touch with the Tax Office for more details and information on where you stand.
This amendment also provides peace of mind to those of us who are working hard to invest in our Super fund. It is good to know that if you really need it you can access your savings even though you have not reached 65.