Tens of thousands of Australians withdrew over $1.4 billion from their superannuation funds on compassionate grounds during the last financial year. This marks a significant increase from previous years, with most of the funds used for medical expenses, including dental care. The Australian Taxation Office (ATO) and the Australian Health Practitioner Regulation Agency (AHPRA) are now urging the elimination of business practices that exploit superannuation for costly or unnecessary medical treatments.

Under the ATO's compassionate grounds scheme, Australians can access their retirement savings to cover specific medical, palliative care, disability, death, and home foreclosure expenses. Since the 2018-19 financial year, the majority of approvals for early superannuation access have been for medical treatment or transport. In the 2024-25 financial year, $1.37 billion was approved for medical reasons, a notable increase from just over $1 billion in 2023-24 and significantly higher than the $389 million approved in 2018-19.

The ATO expressed concern that some health practitioners and registered agents are improperly assisting individuals in accessing their superannuation for cosmetic procedures that do not meet the compassionate release criteria. "While superannuation can be accessed early under compassionate grounds, this is strictly available in very limited circumstances including for critical medical and dental procedures," said Deputy Commissioner Emma Rosenzweig. She emphasized that the compassionate release of superannuation should only be considered a last resort after all other payment options have been exhausted.

Xavier O'Halloran, CEO of Super Consumers Australia, reported that his organization has received complaints about individuals being "massively overcharged" by medical practitioners. He noted, "There's some pretty poor practice out there. We've heard of cases where consumers were being given costings which were well above industry standards and basically people being taken advantage of." O'Halloran highlighted the broader issue of medical care affordability, particularly in dental care, which is often not covered by the healthcare system unless under specific circumstances.

Dental procedures accounted for the largest share of withdrawals, with $817.6 million approved in 2024-25. Other significant amounts included $254.9 million for weight loss treatments and $74.2 million for IVF, both of which also saw increases from the previous year. The number of applications for early superannuation access for dental care has more than doubled in the past two years.

Concerns have also arisen regarding clinics like Supercare Dental and Cosmetics, which reportedly owe patients over $2 million in unfinished dental work after entering administration. For early withdrawal of superannuation to be approved on medical grounds, two medical practitioners must confirm that the funds are necessary to alleviate pain, treat a life-threatening illness, or address mental health issues. The ATO noted that 30 percent of the 93,500 applications for medical treatments last year were denied for not meeting the compassionate release criteria.

"We are seeing practitioners making inaccurate statements in medical reports," Rosenzweig stated. The ATO relies on medical and dental professionals to provide accurate reports regarding diagnoses and treatment strategies. In response to these issues, AHPRA and the Dental and Medical Boards of Australia have issued new guidance for practitioners, emphasizing the need for thorough assessments that prioritize patient health.

AHPRA CEO Justin Untersteiner expressed dismay at the exploitation of the compassionate release process, stating, "There is an inherent trust that the community places in their practitioners and taking advantage of people in need is never acceptable." He urged that any medical advice should be based on the patient's best interests, free from financial incentives.

The demographic of those withdrawing superannuation on compassionate grounds shows that individuals aged 31-55 accounted for 75 percent of approvals in 2024-25. Those earning between $45,001 and $120,000 made up over 60 percent of all approvals. The states with the highest rates of withdrawals were Queensland (31 percent), New South Wales (28 percent), and Victoria (25 percent). Women represented 54 percent of those accessing superannuation on compassionate grounds, a slight decrease from 64 percent in 2018-19, while men accounted for 46 percent.

Experts warn that early withdrawal of superannuation can have long-term financial consequences, particularly for women. O'Halloran advised individuals to seek a second medical opinion before withdrawing funds, as taking out $10,000 in their 30s could significantly impact their retirement savings due to compounding effects.

For those facing financial hardship, resources are available, including national debt helplines and financial counseling services.