The cost of plastic surgery can be a significant barrier for many. Superannuation, primarily designed to support Australians in retirement, has provisions that may allow for early access under specific circumstances. Next, we will discuss if and how you can use your superannuation to fund necessary medical procedures.

 

What Is Superannuation in Australia

Superannuation, often referred to as “super,” is a compulsory retirement savings system in Australia. It requires employers to make regular contributions to their employees’ super funds, which are then invested until the employee retires or meets specific conditions for early release. The primary purpose of superannuation is to ensure that Australians have a sufficient financial reserve to support themselves in retirement, thereby reducing reliance on government pensions.

The Australian superannuation system is regulated by the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA). These bodies ensure that super funds operate in the best interests of members and that funds are used appropriately.

Despite its primary focus on retirement, superannuation can be accessed early in specific situations. The ATO outlines several conditions under which early release is permissible, including severe financial hardship, compassionate grounds, and terminal medical conditions. One of the compassionate grounds for early release includes paying for medical treatments or procedures that are not readily available through the public health system and are necessary to alleviate acute or chronic pain, or mental disturbance.

Accessing superannuation early for medical reasons involves a stringent application process. Applicants must provide detailed evidence supporting their claim, including medical reports and cost estimates for the procedure. This ensures that early access is granted only when absolutely necessary and justified.

The possibility of using superannuation to fund plastic surgery arises under the compassionate grounds category. Procedures that are deemed medically necessary, such as those required to alleviate significant pain or functional impairment, may qualify. Examples include breast reduction surgery to relieve chronic back pain or reconstructive surgery following trauma or significant weight loss.

Keep in mind that while super can provide a financial lifeline, it is also important to consider the long-term impact on retirement savings. Accessing superannuation early reduces the amount available for investment, potentially affecting the financial stability of your retirement years.

 

Conditions for Early Release of Superannuation

Accessing superannuation early to fund plastic surgery is possible under certain conditions set by the Australian Taxation Office (ATO).

Medical Necessity of the Procedure

To qualify for early release of superannuation on medical grounds, the procedure must be deemed medically necessary. This means the surgery is required to alleviate severe pain, physical dysfunction, or a life-threatening condition. It is not sufficient for the surgery to be purely cosmetic; there must be a significant medical benefit.

Financial Hardship

Another criterion for early access to superannuation is experiencing severe financial hardship. To qualify, the individual must prove they are unable to meet reasonable and immediate family living expenses. This often includes situations where an individual has been receiving government income support payments for a continuous period of at least 26 weeks.

Applicants must provide substantial evidence of their financial situation, demonstrating that accessing superannuation is the only viable option to afford the surgery. This may include documentation of income, expenses, and any other financial assets.

Permanent Residency

Only individuals who are permanent residents of Australia are eligible to apply for early release of superannuation. Temporary residents, including those on working or student visas, are generally not permitted to access their super funds early.

 

Medical Necessity Criteria

The ATO requires comprehensive documentation to support the medical necessity claim. Here are the main elements:

Definition of Medical Necessity

A procedure is considered medically necessary if it addresses a significant health issue. This can include surgeries required to alleviate chronic pain, correct functional impairments, or treat conditions that pose a serious risk to the patient’s health. The goal is to ensure that superannuation funds are used responsibly and for essential medical purposes.

Examples of Medically Necessary Procedures

Several plastic surgery procedures may be classified as medically necessary, including:

• Breast Reduction Surgery: Often necessary for women experiencing severe back and shoulder pain due to large breasts. This procedure can significantly improve quality of life by alleviating pain and improving mobility.
• Reconstructive Surgery: Following accidents, injuries, or burns, reconstructive surgery may be required to restore function and appearance. This can include skin grafts, tissue expansion, and other complex procedures.
• Post-Weight Loss Surgery: After significant weight loss, excess skin can cause physical discomfort and hygiene issues. Procedures to remove this excess skin can be considered medically necessary to prevent infections and improve mobility.
• Corrective Surgery for Congenital Defects: Procedures to correct birth defects such as cleft lip and palate, which can impair eating, speaking, and breathing, are often deemed medically necessary.

 

Required Documentation

To apply for early release of superannuation on medical grounds, patients must provide detailed medical reports from both a general practitioner (GP) and a specialist. These reports should outline the medical condition, the necessity of the procedure, and the expected outcomes. Additionally, an itemized quote for the surgery must be included, detailing the costs involved.

Application Process

The application process involves several steps:

1. Obtain a Referral: Start by visiting a GP to discuss the medical necessity of the surgery and obtain a referral to a specialist.
2. Specialist Assessment: Dr Bish Soliman will assess the condition and provide a detailed report supporting the need for surgery.
3. Submit Documentation: Compile all required documents, including medical reports and cost estimates, and submit them to the ATO through MyGov.
4. Super Fund Approval: Ensure that your superannuation fund allows for early release under these circumstances and follow their specific procedures.

 

Tax Implications

Accessing your superannuation early to fund plastic surgery has potential tax implications that must be carefully considered. When superannuation is released early, it is usually subject to tax, unlike regular retirement withdrawals which might benefit from tax concessions.

Potential Tax Liabilities

• Taxable Component: The amount withdrawn early is generally taxed at your marginal tax rate. This can significantly impact the net amount you receive, especially if you are in a higher tax bracket.
• Preservation Age: If you are under your preservation age (typically 60 years), the tax rate can be higher. For those above preservation age but below 65, the rate is lower but still applicable.

Given the complexities involved, it is important to consult with a tax professional before proceeding with an early superannuation withdrawal. A tax advisor can:

• Help you understand the specific tax obligations based on your financial situation.
• Provide strategies to minimise tax liabilities.
• Ensure compliance with all relevant tax laws and regulations.

 

Risks and Considerations

While accessing superannuation early to fund plastic surgery might provide immediate financial relief, it is essential to weigh the long-term implications carefully.

Potential Impact on Retirement Savings

• Reduced Retirement Funds: Early withdrawal means you will have less money in your superannuation fund, which can significantly impact your retirement savings. This reduction can affect your financial security in retirement.
• Lost Investment Growth: Superannuation funds are designed to grow over time through investments. By withdrawing early, you miss out on the potential compound growth of your savings, which could have substantial long-term benefits.
• Impact on Retirement Lifestyle: A reduced superannuation balance could result in a lower standard of living during retirement, necessitating adjustments to your future lifestyle and financial plans.

FAQs about Using Super to Pay for Plastic Surgery

Can I use my superannuation to pay for cosmetic surgery purely for aesthetic reasons?

• No, superannuation funds can only be accessed early for surgeries deemed medically necessary by a qualified healthcare professional. Purely cosmetic procedures without a medical justification do not qualify for early release.

What happens if my application for early superannuation release is denied?

• If your application is denied, you will need to explore alternative funding options such as personal loans, medical financing plans, or saving up for the procedure over time.

Are there any time limits or deadlines for using the released superannuation funds?

• Yes, typically there are deadlines for utilising the funds once they are released. It’s important to confirm these timeframes with your superannuation fund and plan your surgery accordingly to ensure compliance.

How long does it take to get approval for early superannuation release?

• The processing time can vary, but it generally takes several weeks to receive a decision. This includes the time needed to gather all necessary documentation, submit the application, and for the ATO to process and approve the request.