SMSF pandemic relief requires expert advice
The COVID-19 relief measures implemented by the Federal Government and extended into the 2021-22 financial year have revealed the need of self-managed super funds (SMSFs) for specialist advice, according to John Maroney, CEO of SMSF Association.
Maroney said the COVID-19 pandemic has only made managing an SMSF is more complex, especially for those who have just begun their journey towards a self-directed retirement.
“The challenges of this pandemic have added another layer of complexity, so for SMSF members, especially those retired or approaching retirement, who are struggling with the COVID-induced changes, getting specialist advice is imperative.
“Such advice remains pertinent as the ATO has confirmed it will extend relief measures granted for the 2019-20 and 2020-21 financial years to this financial year,” he said.
The SMSF Association highlighted five key areas of relief that SMSFs should consider in this year’s superannuation reporting, including rental relief, loan repayment relief, in-house asset relief, minimum pension drawdowns and SMSF residency relief.
Maroney said rental relief is a serious consideration because property makes up a significant part of several SMSF portfolios.
“The ATO decision confirms SMSF landlords can continue providing rental relief, with the caveat that any reduction, waiver, or deferral of rent is only temporary and appropriate,” he said.
Maroney also said the Australian Taxation Office’s (ATO) decision to put aside applications of compliance resources on the issue of residency requirements for the next financial year will be welcomed by affected SMSFs, as many Australians are still stranded overseas due to pandemic travel restrictions and disruptions.
The ATO also extended its relief for limited recourse borrowing arrangements (LRBAs) to allow SMSFs to negotiate loan repayment adjustments.
“Breaches of the in-house asset rules will not attract compliance activity provided a written plan has been prepared to reduce the market value of those assets to below 5%,” Maroney said.
“In addition, the 50% temporary reduction in the minimum drawdown requirements for account-based and market-linked pensions has been extended.
Maroney highlighted how the measures will help to ease the stress on SMSFs as the pandemic hopefully wanes.
“We therefore urge SMSFs to consider using a specialist who will be able to determine the impact of COVID-19 on their fund and whether they are eligible to take advantage of the extended relief measures.”