A Record $1.46 Billion Released From Super on Compassionate Grounds, and the ATO Has Raided a Melbourne Dental Practice

Australians withdrew a record $1.46 billion from their superannuation on compassionate grounds in 2025–26, and the tax office has stepped up its pursuit of the health practitioners and promoters it says are exploiting the scheme. This week ATO officers, supported by the Australian Federal Police, executed a search warrant at a Melbourne dental practice, the ATO said in a release on Friday 30 October.

The numbers

According to ATO data reported by the ABC, about $1.42 billion of the $1.46 billion released last financial year went on medical costs. Dental treatment was the largest category at $892 million, a 13-fold increase on the roughly $66 million approved in 2018–19.

The number of approved applications fell 5%, from 67,900 to 64,600, but the total value approved rose 2%, the ATO and the Australian Health Practitioner Regulation Agency (Ahpra) said in a joint release on 22 October.

The search warrant

The ATO said the Melbourne practice is linked to a former health practitioner suspected of supporting people to access their super illegally by falsely claiming compassionate grounds. It is alleged the practitioner supplied fraudulent medical reports for dental treatment where applicants were ineligible or the work was never provided, supported 1,178 applications resulting in the release of more than $36.4 million, and used recruiters to attract people into the scheme. The allegations have not been tested and investigations are ongoing.

“This wasn’t a misunderstanding of the rules. These allegations point to a deliberate attempt to take advantage of a system designed to help Australians in genuine need,” ATO acting Deputy Commissioner Pennie Snowden said.

The wider crackdown

Since 1 July 2025 the ATO has started more than 160 reviews and audits where it suspects false or misleading statements in applications or medical reports, with penalties of more than $1.5 million. In one case study, a health practitioner was hit with an administrative penalty of around $30,000 over a medical report containing false and misleading clinical information.

“A concerning trend we’re seeing are business arrangements that target and pressure people to access their super to pay for certain procedures,” ATO Deputy Commissioner Ben Kelly said. “These arrangements include short online consultations and the use of templates designed to streamline the process for people to access their super.”

Ahpra chief executive Justin Untersteiner said: “Practitioners should know that putting profits before patients is not only unsafe – it could cost them their right to practise.”

The tax sting

The ATO stresses that released amounts may be taxable and can increase a person’s reportable income, which could affect eligibility for government payments such as the Family Tax Benefit. It lists red flags including social media advertising of early access to super, practitioners asking for personal details to apply on a patient’s behalf, telehealth instead of in-person examinations, and fees for submitting an application.

The long-term cost can be large. Super Members Council chief executive Misha Schubert told the ABC that withdrawing $20,000 could ultimately cost someone $93,000 by retirement in lost compound earnings. Financial Services Minister Daniel Mulino said: “Australians should not be pressured into accessing their superannuation for unnecessary medical or dental procedures.”

Sources: ATO media release, 30 October 2026; ATO and Ahpra joint media release, 22 October 2026; ABC News, 23 October 2026. This article is general information only and is not tax or financial advice.