Resources to help your SMSF clients
Up-to-date as at 11 May 2020
The SMSF Association as a priority is actively monitoring the economic uncertainty resulting from COVID-19. We understand for you, your business and clients these are unchartered waters, and we will make every effort to help you navigate the challenges ahead and continue to ensure your member services are uninterrupted.
The latest updates include:
- Updated FAQ based on questions submitted during our most recent complimentary webinar.
WHITE LABEL DOCUMENTS
Members have exclusive access to our white label documents to assist in communicating the most recent and important measures that their SMSF clients should be aware of. White label documents can be branded with your organisation’s logo and contact details before sending to clients encouraging them to get in contact with you to discuss their specific circumstances in more detail.
White label document: COVID-19 – Providing concessions for the LRBA in my SMSF
If your SMSF has a related party loan and is impacted due to the financial effects of COVID-19, you may be able to provide your LRBA with relief under an
COVID-19 – Providing rental relief for the tenant in my SMSF property
If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This may
COVID-19 – Early access of superannuation
31 March 2020 You may be aware that the Government recently announced measures that allow individuals affected by the economic impacts of COVID-19 access a limited amount of their superannuation
COVID-19 – The Government’s economic stimulus packages explained
Over the past two weeks the Government has announced two economic stimulus packages to cushion the economic impact of the Coronavirus. A total of $189 billion is being injected into
SHORT-FORM COVID-19 SUPER ACCESS ROA TEMPLATES
This Template includes the information that you must include in your Record of Advice by law (under the Corporations Act as modified by ASIC Corporations (COVID-19—Advice-related Relief) Instrument 2020/355).
You can tailor the layout of the Template by inserting your own practice branding and making other formatting changes if you wish. You must tailor the template to the client’/s’ specific needs and circumstances.
Please note that this Template has been designed to be given to a client who:
- is a citizen or permanent resident of Australia or New Zealand; and
- has had their employment impacted by COVID-19.
You will need to make adjustments to the Template if you are advising a client impacted by COVID-19 whose situation is different (for example, a client who is unemployed, a sole trader and/or a temporary resident).
UP TO 6 CPD HOURS AVAILABLE
COVID-19 and SMSFs: How to practically apply relief measures – rent, valuations, audit requirements and more… – 1 CPD hour
The panel discussed a range of SMSF relief measures, how to practically apply them and took a detailed look at property within an SMSF including how COVID-19 relief measures could affect your clients and their fund.
The panel also discussed:
- Audit issues to be considered such as reasonable evidence
- The valuation process, digital signatures, NGUTs, loans
- What you need to prepare for now before work commences on 2020 annual SMSF returns.
Click here to access the webinar recording.
COVID-19: In conversation with the ATO – SMSF Auditors – 0.75 CPD hour
This edition of ‘In conversation with the ATO’ features the ATO’s SMSF Auditor Portfolio Director, Kellie Grant, and the SMSF Association’s Technical Manager, Mary Simmons, covering the impact of COVID-19 from an SMSF auditor’s perspective.
This discussion covers:
- ATO announces SMSFs will not face compliance action where an in-house asset breach that arose in 2019 could not be rectified by 30 June 2020 due to COVID-19.
- Confirmation from the ATO that 2020 and 2021 ACR instructions will be changed to reflect what auditors will be required to report via an ACR.
- Clarification of electronic signatures for financial statements.
- How auditors need to evidence funds capitalising interest on LRBA loan relief arrangements.
- Evidence auditors should rely on if SMSFs offer rent relief to any tenant.
- Guidance on documenting the impact of COVID-19 when finalising 2019 audits.
- Evidence that auditors are to expect from trustees in relation to investment strategies and asset market valuations.
- Confirmation from the ATO on the auditor’s role in relation to COVID-19 temporary early access measure and pension minimum drawdown requirements.
Click here to access the recording.
ASIC’s COVID-19 relief measures for advisers and tax agents – 1 CPD hour
This webinar featured a dynamic panel discussing all three relief measures in more detail. The panel provided the practitioner’s perspective, how the practical application would work and what a Record of Advice (ROA) should look like. This recording is essential viewing for both licensed advisers and registered tax agents to ensure they understand how these measures will affect them and the advice they can or can not provide.
Click here to access the webinar recording.
COVID-19 and dealing with FASEA requirements panel discussion – 1 CPD hour
This webinar featured SMSF Association CEO, John Maroney, Verante Financial Planning Director, Liam Shorte, and Vincents Director – Superannuation Advisor, Brett Griffiths as they host an informative panel discussion with FASEA CEO, Stephen Glenfield.
The discussion covered how FASEA is managing its role during the COVID-19 pandemic and how advisors should deal with various FASEA requirements over the next 6 to 12 months, especially the FASEA Code of Ethics.
Click here to access the webinar recording.
COVID-19 and what it means for the SMSF sector (Part 1 & 2) – 0.75 CPD hours per webinar
Our CEO, John Maroney, presented two interactive webinars, ‘COVID-19 and what it means for the SMSF sector’. John outlined the latest developments including the Government’s economic stimulus packages and how they affect you and your SMSF clients. The webinars also highlighted the latest information and resources that will assist you and your SMSF clients during this difficult period.
Part 1 recording available here | Part 2 recording available here
Click here to access the Legs & Regs webinar that John referenced throughout the COVID-19 update.
In conversation with the ATO (Part 1 & 2) – 0.75 CPD hours
In-depth discussion between the ATO’s Assistant Commissioner – SMSF Segment, Dana Fleming and the SMSF Association’s CEO, John Maroney.
Part 1 focused on:
- Rental relief – Due to the current uncertain market conditions, waiving or reduction of rent in the 2020 and/or 2021 financial years will result in no action taken by the ATO. Ensure appropriate documentation of decisions including reasonings.
- LRBAs – ATO will treat LRBAs the same as rental relief ie. no compliance action will be taken due to COVID-19.
- NALI – ATO will publish a final update in late April/early May. As this is an ongoing issue, there will be no specific COVID-19 update provided.
- TBAR – Lodgement will flow on from annual return extensions. Tax agents can apply for a 6-week lodgement deferral to 30 June 2020 if required, deferral must be applied for before 15 May 2020.
Part 2 focused on:
- Halving of minimum pension drawdowns
- Early release of superannuation
- SMSF establishment statistics
Latest ASIC announcements
ASIC grants relief to 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 for both licensed advisers and registered tax agents 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 timeframe for providing time-critical SOAs
- Relief to enable an ROA to be given in certain circumstances
The SMSF Association, in conjunction with other major Australian professional bodies – CPA Australia, Chartered Accountants Australia and New Zealand (CA ANZ), Financial Planning Association (FPA) and Institute of Public Accountants (IPA) – have joined forces over the past weeks to work with ASIC to ensure Australians can get the advice they need to understand the Federal Government’s COVID-19 economic packages, including early access to their superannuation. Click here to read more.
Relief measures FAQs
We have collated and answered the most frequently asked questions which clarify the application of the three types of relief ASIC have provided including the early release of super, urgent advice and SOA relief i.e. which clients the measures can apply to.
Click here to view the FAQ document – available to SMSF Association members only.
Click here to hear an update on ASIC’s relief measures from the SMSF Association’s Policy Manager, Franco Morelli.
The ATO has announced that 2018-19 SMSF annual return lodgements have been deferred to 30 June 2020 due to the effects of COVID-19. Read more about this on the ATO’s website here.
The SMSF Association applauds the ATO’s flexible approach to issues during the COVID-19 pandemic. Our relationship with the ATO has never been stronger with ATO Commissioner Chris Jordan attending a recent Association Board meeting and SMSF Assistant Commissioner Dana Fleming being receptive to our advocacy efforts in supporting SMSF professionals during this difficult time. Click here to read more in our full Media Release.
Updated self-managed super funds frequently asked questions
Answers to questions on:
- 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 the ATO’s answers to their most frequently asked COVID-19 SMSF questions.
The Australian Taxation Office have provided updated information on the JobKeeper Payment support for businesses significantly affected by COVID-19.
Please click on the following headings for more information:
- Amount of JobKeeper payment
- Eligible employees
- Paying your eligible employees
- Eligible employers
- Your eligible employees
- Sole traders and other entities
- Tax and BAS agents
- Enrol for the JobKeeper payment
- How much you will get from your employer
- How the JobKeeper payment affects income support payments
- JobKeeper guides
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 ATO announced that SMSF trustees or their tax agents can request an extension for lodgement of their SMSF’s 2019 annual return, if they require more time due to COVID-19. Read more on the ATO website here.
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.
- 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 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.
Government announcements – Key superannuation measures
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 – SME commercial leasing principles during COVID-19
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.
Temporarily reduce superannuation minimum drawdown rates
The Government is temporarily reducing superannuation minimum drawdown requirements for account based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees by providing them with more flexibility as to how they manage their superannuation assets. Click here for the fact sheet.
Early release of superannuation
The Government will allow individuals in financial stress as a result of the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.
Eligible individuals will be able to apply online through myGov for access of up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 for another three months. They will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments. Click here for the fact sheet.
The ATO has released the following details regarding an early release for SMSF members:
If your member is eligible, they can apply through myGov from mid-April. The ATO will issue them with a determination advising of their 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.
Reducing social security deeming rates
On top of the deeming rate changes made at the time of the first package, the Government is reducing the deeming rates by a further 0.25 percentage points to reflect the latest rate reductions by the RBA.
As of 1 May 2020, the lower deeming rate will be 0.25 per cent and the upper deeming rate will be 2.25 per cent.
The change will benefit around 900,000 income support recipients, including Age Pensioners. Click here for the fact sheet.
Other economic stimulus measures
There is a range of other economic stimulus measures available, in particular for small businesses to manage cash flow challenges and retain employees. These measures include:
- Temporary relief for financially distressed businesses
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
Click the above dot points to read more detailed information about each measure.
Boosting Cash Flow for Employers
The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
The Government has budgeted $32 billion for this measure and many SMSF Association members would be eligible to receive up to $100,000. Click here for the fact sheet.
The SMSF Association’s COVID-19 FAQ
We have collated and answered the most frequently asked questions regarding COVID-19 and what it means for the SMSF sector in this simple FAQ.
Click here to download the FAQ document.
(This document is up-to-date as at 11 May 2020.)
View our latest ASIC announcements section on this webpage for our ASIC relief measures FAQ document.
The SMSF Association’s COVID-19 summary document
Over the past two weeks the Government has announced two economic stimulus packages to cushion the economic impact of the Coronavirus.
A total of $189 billion is being injected into the economy by all arms of Government in order to keep Australians in work and businesses in business. This includes $17.6 billion for the Government’s first economic stimulus package, $90 billion from the RBA and $15 billion from the Government to deliver easier access to finance, and $66.1 billion in the recently announced economic support package.
We’ve summarised all the major packages in easy to understand language for you and your SMSF clients.
How we are working to support you:
Advocating to Government
- We have made representation to the Australian Taxation Office for related party loan relief, non geared unit trusts and practical application of signature relief. Click here to read that letter.
- We have made further representation to Government and the Australian Taxation Office for the deferral of SMSF lodgement, rent concessions, in-house asset breach relief and TBC shocks.
Click here to read that letter.
- 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 and their advisers including the increased need for Specialist advice.
Providing you with information to reassure your clients and keep them up to date
- Your clients may have already contacted you in relation to the economic downturn, their investments and health issues. We will be providing information on SMSF strategies that you can share with your clients to assist them during this period of uncertainty.
Reducing impacts on you as a business owner and manager
- Whilst we don’t currently have all the answers, we are exploring how we can best support you and your staff during this challenging time as a matter of urgency.
Maintaining your SMSF knowledge to assist your clients
- We are working through how we continue to deliver CPD amidst change including an increased focus on online opportunities to enable you to meet your CPD requirements across the industry.
- Ensuring uninterrupted access to our Technical Research Service and existing CPD and education programs.
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.