The temporary incapacity provisions under the Superannuation Industry (Supervision) (SIS) Regulations may allow individuals suffering from the coronavirus legal early access to their retirement and superannuation savings to ensure they continue to receive income throughout their illness, an SMSF strategist has said.
According to I Love SMSF director Grant Abbott, the temporary incapacity rules are applicable to the current COVID-19 pandemic because it covers situations where an individual has had to stop work for a significant period of time due to a form of illness.
“For example, if someone is quarantined due to the coronavirus, it might be difficult to show ill health. But if they’ve got flu-like symptoms or they’ve got anxiety [as a result of being quarantined] and they go to a doctor and get a certificate for that, then they are right in the middle of [the temporary incapacity rules] and the fact they are off work or their business has closed down, then they are temporarily incapacitated,” Abbott said during his latest strategy seminar today.
With reference to the SIS Regulations payment standards, access to super benefits under the temporary incapacity rules has to come via a non-commutable income stream.
“[The regulations say] a non-commutable income stream is a benefit that cannot be commuted, is paid at least monthly, does not have residual capital value, and the total amount paid each month is fixed or varied only for CPI (consumer price index),” Abbott said.
“So it’s effectively a salary continuance benefit and it’s paid directly out of a superannuation fund.”
He pointed out even if an individual is quarantined or affected by the coronavirus for as short a time as three or four weeks, a claim on superannuation benefits via their SMSF can be made for that period.
Further, he noted SMSF members are in an advantageous position if they want to invoke the temporary incapacity provisions of the SIS Regulations because it is a trustee-by-trustee determination that does not require ATO involvement.