Updated as of 22 April 2020
The SMSF Association as a priority is actively monitoring the economic uncertainty resulting from COVID-19. We will provide updates as they are announced in conjunction with SMSF resources to help you navigate the challenges ahead.
The latest updates on this page include ASIC’s relief measures announcement and resource, LRBA concessions resources, plus additional information provided by the ATO on their COVID-19 FAQs and the JobKeeper Payment.
To assist us with best directing our resources to support you during this time, we would love to hear from you. Please provide feedback here.
Resources to help you during this time
Latest updates from the ATO
Lodgement of 2018-19 SMSF annual returns have been deferred to 30 June 2020.
Read more in our Media Release here.
Updated self-managed super funds frequently asked questions
The ATO has published updated answers to questions on:
Click the titles for further information on the ATO website.
- Early access to super
- Related party limited recourse borrowing arrangement relief
- Temporarily reducing superannuation minimum payment amounts
- Providing rent relief
- Super balance losses
- SMSF residency
- In-house asset restrictions
- Investment strategies
Click here to read all the FAQs on the ATO’s website.
JobKeeper Payment
The ATO has provided updated information on the JobKeeper Payment support for businesses significantly affected by COVID-19. The ATO has provided guidance on the amount of JobKeeper Payment, eligible employees and employers, details for sole traders and other entities, instructions on enrolling for the JobKeeper Payment and much more.
Click here to read the ATO’s guidance on the JobKeeper Payment.
SMSF loan relief
- The ATO have confirmed to the SMSF Association that their compliance approach for the 19-20 and 20-21 financial years will not take action where an SMSF offers a related party, who has a compliant loan agreement in place, any concessions that result from the impact of COVID-19.
SMSF residency
- The COVID-19 health crisis has resulted in many countries imposing travel bans. If the individual trustees of an SMSF or directors of its corporate trustee are stranded overseas due to COVID-19, in the absence of any other changes in the SMSF or the trustees’ circumstances affecting the other conditions, the ATO will not apply compliance resources to determine whether the SMSF meets the relevant residency conditions.
The ATO has released the following details regarding an early release for SMSF members:
If you are eligible, you can apply through myGov from mid April. You will then be issued with a determination advising of your eligibility to release an amount. When you receive the determination, you will be authorised to make the payment. The ATO has provided information to funds on the design and implementation for the COVID-19 early release of superannuation package. Click here to read more.
Trustee responsibilities for early release of super
As an SMSF trustee, you are responsible for your and your members’ retirement savings. Please make sure you are eligible for early release of super before you release any funds from your SMSF. Click here to read more in our latest article here.
Related party limited recourse borrowing arrangement relief
Question: My SMSF has a compliant limited recourse borrowing arrangement (LRBA) in place with a related party. Would the non-arm’s length income (NALI) provisions apply if the related party offers repayment relief to the SMSF trustees because of COVID-19?
Answer: If the repayment relief reflects similar terms to what commercial banks are currently offering for real estate investment loans as a result of COVID-19, we will accept the parties are dealing at arm’s length and the NALI provisions do not apply.
Providing rent relief – Updated for interposed entities
If your SMSF holds an interest in an interposed entity such as a non-geared company or unit trust and that interposed entity leases property to a tenant, we will not treat the investment in the interposed entity as an in-house asset for the current and future financial years as a result of a deferral of rent being provided to the tenant due to the financial effects of COVID-19.
The SMSF Association is pleased to announce that the ATO has responded to our requests for guidance regarding rent concessions and in-house assets. Please see their guidance below:
Temporarily reducing rent
Question: My SMSF owns real property and wants to give my tenant – who is a related party – a reduction in rent because of the financial impacts of the COVID-19. Charging a related party a price that is less than market value is usually a contravention. Given the impacts of the COVID-19, will the ATO take action if I do this?
Answer: Some landlords are giving their tenants a reduction in or waiver of rent because of the financial impacts of the COVID-19 and we understand that you may wish to do so as well. Our compliance approach for the 2019–20 and 2020–21 financial years is that we will not take action where an SMSF gives a tenant – who is also a related party – a temporary rent reduction during this period.
In-house asset restrictions
Question: The downturn in the share market may result in the fund’s in-house assets being more than 5% of the fund’s total assets. The in-house asset rules would be breached. What do I need to do?
Answer: If, at the end of a financial year, the level of in-house assets of a SMSF exceeds 5% of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5% or below. This plan must be prepared before the end of the next following year of income. If an SMSF exceeds the 5% in-house asset threshold as at 30 June 2020, a plan must be prepared and implemented on or before 30 June 2021. However, we will not undertake compliance activity if the rectification plan was unable to be executed because the market has not recovered or it was unnecessary to implement the plan as the market had recovered.
The Australian Taxation Office has also announced a range of administrative support measures, more details can be found here.
Government Announcements:
JobKeeper
The Government has now passed legislation to support the $130 billion JobKeeper payment, helping keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus. Around 6 million workers will receive a fortnightly payment of $1,500 (before tax) through their employer. The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over. Click here for the fact sheet.
Click here for more detailed information on the Treasury website.
National Cabinet Rental Code
The objective of the Code is to share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period, whilst seeking to appropriately balance the interests oftenants and landlords.
The SMSF Association has summarised the key takeaways and the implications for SMSF for commercial tenancies. Click here to read our full summary.
On Sunday 22 March 2020, the Federal Government announced Economic Stimulus Package No.2. with the key superannuation measures including;
Early release of superannuation
Reducing social security deeming rates
How we’re working to support you:
Advocating to Government
- We have made representation to the Government, for temporary relief to be put in place for minimum pension withdrawals. Click here to read that letter.
- We are in the process of, and will continue to represent member concerns to the Government and ATO. We will remain alert to further opportunities to request relief (financial or otherwise) for SMSF members.
ASIC announcements
ASIC grants relief allowing industry to provide affordable and timely financial advice during the COVID-19 pandemic.
The Australian Securities and Investments Commission (ASIC) has announced three temporary relief measures to help consumers receive affordable and timely financial advice during the COVID-19 pandemic:
- Relief to facilitate advice about early access to superannuation
- Relief to extend the time frame for providing time-critical Statements of Advice (SOA)
- Relief to enable a Record of Advice (ROA) to be given in certain circumstances
Health announcements
During this period, we ask that you follow the recommendations and advice on the Australian Federal and State Government Health Departments and the World Health Organization websites.