COVID-19 is affecting many self-managed super fund (SMSF) trustees. The following information has been collated to help you navigate these uncertain times.
To find out more about these or any other issues or concerns you may have, please contact us at consulting@ww2.austasiagroup.com. We are here to help.
| Issue | Guidance |
Access to super – compassionate grounds – coronavirus |
As a last resort, temporary early release (access) is available to members who are adversely (economically) affected and satisfy the eligibility criteria (refer to ATO website).
The maximum amount a member can access is up to $10,000 in 2019/20 and an additional $10,000 in 2020/21 (applied for no later than 24 September 2020). Applications are via MyGov and can be made from 20 April 2020. If eligible for early release of super, the ATO will issue a determination to the person and the trustee of the SMSF including the amount to be paid. Only then is the trustee authorised to make a payment. Before making the payment, care should be taken to ensure:
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Pension payments |
Every year trustees must ensure the minimum pension payment is met. Minimum pension payments for the current (2019/20) and next (2020/21) financial years have been halved to address concerns with the current market volatility.
As the minimum has been halved for 2019/20, it is possible to reduce pension payments for the remainder of the financial year. If a member has already met the reduced minimum, no further payments are necessary for the remainder of this financial year. However, it is important to follow the rules of the fund to ensure a request is received by the member in the correct format. The new minimum pension payments for next financial year will be calculated on the member’s 1 July 2020 account balance. Care should be taken to ensure the:
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Investment strategy |
The investment strategy of the fund must be reviewed regularly. Where the fund’s investments do not align with the investment strategy (for example, due to market downturn), action should be taken to either rebalance the asset allocation or to amend the investment strategy where appropriate. Similar action may need to be taken in the event of market recovery. Consideration should be given to any impact on the investment strategy from withdrawals made by members. |
Rental income from SMSF properties |
The ATO has confirmed that SMSFs can provide temporary relief to rental arrangements with tenants including those who are:
This type of arrangement would ordinarily trigger a range of compliance breaches, however, the ATO has indicated it will not take compliance action for the 2019/20 or the 2020/21 financial years. Care should be taken to ensure:
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In-house assets |
In-house assets cannot exceed 5% of the fund’s total assets. Where in-house assets exceed this threshold at the end of a financial year, the trustees of the fund must write and execute a plan to correct the position by the end of the following financial year.
Where the in-house asset limit is breached on 30 June 2020 and the written plan to correct the position has not been successfully executed by 30 June 2021, the ATO will not take compliance action if the plan has not been executed because:
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Estate planningSuccession planning |
In times of uncertainty and heightened risk of illness, it is more important than ever to develop or review the fund’s succession plan and the members’ estate planning wishes. This includes making sure Enduring Powers of Attorney are in place and understanding the rules of the fund in the event of a trustee’s death.
Broadly speaking, succession planning aims to ensure the right people:
Due to the complexity of these matters, trustees/members should seek legal advice to ensure their wishes can be accomplished via succession planning and supporting documentation. This includes superannuation death benefit nominations (if appropriate) as well as a Will. |
Regulatory reporting & SMSF annual returns |
The ATO has allowed accountants and auditors some leniency on lodgements of the SMSF annual return should COVID-19 affect their ability to lodge before the due date.
An extension (for up to six weeks) should be requested before the due date. Where an extension is granted, this will also extend to Transfer Balance Account Reporting obligations where the fund reports transfer balance account events annually. Further information regarding this extension can be found on the ATO website. |
Residency Requirements |
If the individual trustees or its directors of a corporate trustee are stranded overseas due to COVID-19, the ATO will not apply compliance resources to determine whether the SMSF meets the relevant residency conditions that would ordinarily apply.
Further information regarding this issue can be found on the ATO website. |
Additional information |
The ATO has provided a series of questions and answers for SMSF trustees. |