The ATO has published answers to a number of frequently asked questions relating to the impact of COVID-19 on SMSFs – ATO COVID-19 FAQs
Rent Relief for Related Parties
One of the most common questions is whether a related party tenant can receive a rent reduction and continue to comply?
The commercial reality is that some landlords are providing rent relief or a waiver of rent because of COVID-19.
The good news is that the ATO will not take compliance action for the 2019-20 and 2020-21 financial years where a related party tenant is given a temporary rent reduction during this period.
The concept of commercial and arm’s length transactions, however, should be carefully considered in any negotiation between related parties.
Most importantly, it’s critical to keep a well-defined paper trail all communication about rent relief; the commencement and end dates and any other changes to the lease agreement currently in place.
Note that the ATO has said it will not take compliance action for a temporary rent reduction only – it is not clear if this is extended to a waiver of rent.
The ATO has also provided answers to the following questions:
- Temporarily reducing superannuation minimum payment amounts
- In-house asset restrictions
- Super balance losses
- Investment strategies
Early Access to Super Benefits
The Government has recognised that business downturn and high unemployment levels provide significant financial hardship for all Australians.
The ATO has approved early access to superannuation benefits where members meet one or more of the following eligibility requirements:
- Unemployment; or
- Members are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
- On or after 1 January 2020 any of the following happened:
- the member was made redundant; or
- their working hours were reduced by 20% or more; or
- if they are a sole trader — their business was suspended, or there was a reduction in turnover of 20% or more
Members can apply for early release of super through their myGov account from 20 April. An amount of up to $10,000 can be applied for during 2019-20 and up to a further $10,000 in 2020-21.
The Government has stated that no tax is payable on the amounts released under these circumstances and any money withdrawn does not affect Centrelink or Veterans’ Affairs payments.
Early access to super, however, shouldn’t be viewed as a windfall. In light of the current economic circumstances, it is recommended that SMSF trustees seek financial advice where necessary.
ASF Audits Approach
We have always worked on the premise that SMSFs must operate in a commercial framework and remain compliant.
The impact of COVID-19 has not changed our approach.
We are here to answer your questions, help you with any issues you may have throughout the audit and provide guidance during this confusing time.
In the coming weeks, ASF Audits will be announcing a new digital initiative to help our clients, and the SMSF industry in general, to chart these unmarked waters.
In the meantime, stay healthy and safe.
ASF Audits is the home of one-click SMSF auditing. Contact us on 1800 327 872 for more information.
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