A complainant approached the IGTO with a concern that the ATO had rejected their application for early release of superannuation on a compassionate ground (ERSB application) without appropriately considering their situation. The complainant had applied to the ATO to access their superannuation early to pay for their mother’s medical treatment. The complainant does not habitually live with their mother or provide domestic support or personal care for her. The ATO rejected their application on three occasions (initial application, informal review, and complaint) on the basis that their mother was not a ‘dependant’ as defined, because the mother was not in an ‘interdependency relationship’ with the complainant. In making that decision, the ATO did not consider whether other forms of dependency may have been present and did not give the complainant an opportunity to provide further information to demonstrate this.

Under regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (SISR), a person may apply to the ATO to access their superannuation early on compassionate grounds (including to pay for medical treatment for the person or their ‘dependant’). The term ‘dependant’ is defined in subsection 10(1) of the Superannuation Industry (Supervision) Act 1993 (SISA). The definition provides that a ‘dependant, in relation to a person, includes the spouse of the person, any child of the person and any person with whom the person has an interdependency relationship’ [emphasis added]. This suggests that the definition of a ‘dependant’ is an inclusive definition, which also covers a ‘dependant’ within the ordinary meaning of that word (e.g., someone who is financially dependent on a person). However, the current ATO web guidance (QC 60034) on the definition of ‘dependant’ for the purpose of compassionate release of superannuation is unclear and may lead to a misunderstanding that it is an exhaustive definition (i.e., a dependant can only be your spouse, your child, or a person with whom you have an interdependent relationship).

As a result of the IGTO investigation, the ATO agreed to review the complainant and their mother’s situation to confirm whether the mother was a ‘dependant’ of the complainant within the ordinary meaning of the word. The ATO also agreed to update its web guidance and internal ATO staff guidance to clarify that a ‘dependant’ for the purpose of compassionate release of superannuation covers a dependant within the ordinary meaning of the word and to ensure ATO officers take a consistent approach in processing future compassionate release of superannuation applications.