The extension of federal government relief measures to tackle economic pressures caused by the coronavirus pandemic continues to highlight the importance of specialist advice for SMSFs, according to the SMSF Association.
Association chief executive John Maroney said the impact of COVID-19 and the extension of relief measures for SMSFs into the 2022 financial year add to the issues that need to be considered as a trustee or member of a fund.
“Managing an SMSF can be complex at the best of times, particularly for those who have just begun their journey towards a self-directed retirement,” Maroney said.
“But 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.”
According to Maroney, SMSFs should pay close attention to five areas in their fund reporting: rental relief, loan repayment relief, in-house asset relief, minimum pension drawdowns and SMSF residency relief.
“These are all important measures that will help ease the stress on SMSFs, even as the pandemic hopefully recedes. 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,” he said.
“Remember, too, the importance of having all the necessary documentary evidence to provide an auditor to support any relief claims made and to ensure there are no breaches of the ATO’s rules.
“For LRBAs (limited recourse borrowing arrangements), the ATO has extended its relief 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 per cent.
“In addition, the 50 per cent temporary reduction in the minimum drawdown requirements for account-based and market-linked pensions has been extended.”
In addition, property ownership has grown to become a significant aspect within SMSF portfolios, he said.
“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.
He said in relation to residency requirements, many Australians were still stranded overseas because of travel restrictions and disrupted air travel, “so the ATO’s decision to waive the application of compliance resources in 2021/22 will be welcomed by affected SMSFs”.
