SMSF COVID-19 relief measures extended

The Australian Taxation Office (ATO) has extended relief measures for self-managed super fund (SMSFs) trustees due to the extended lockdowns in certain states.

These affected SMSF residency, rental relief, loan repayment relief and in-house asset relief.

The reliefs currently applied to the 2019/20 and 2020/21 financial years but this had since been extended to the 2021/22 years as well.

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“We understand that COVID-19 continues to have a significant financial effect on self-managed super funds (SMSFs), particularly in some States or Territories where there are reoccurring and prolonged lockdown periods,” the ATO said.

“As a result, you may still find yourself in a position where you (in your role as trustee) or a related party of the fund, are having to provide or accept certain types of relief, which may give rise to contraventions under the super laws.”

If an SMSF member was stuck overseas because of Australia’s travel ban and out of the country for more than two years, the ATO said it would not apply compliance resources to determine if the fund still met the residency test.

Similarly, it would not take compliance action regarding the in-house asset threshold if a fund failed to submit a written plan to reduce the market value of a fund’s in-house assets because of COVID-19, by 30 June, 2022.

“If a SMSF exceeded the 5% in-house asset threshold at 30 June, 2021, due to the financial impacts of COVID-19, you must still prepare a written plan to reduce the market value of the fund's in-house assets to below 5% by 30 June, 2022,” it said.

“However, we will not take compliance action against your fund where you have not executed the plan by 30 June, 2022, due to the financial impact of COVID-19. For example, because you are unable to execute the plan because the market has not recovered in some areas, or it may be unnecessary to implement it as the market has recovered.”

Regarding the measures for rental relief, specifically, the ATO said it planned to make a further determination in due course to ensure rental deferrals offered by a fund to a tenant did not cause a loan or investment to be an in-house asset in the current and future financial years.

Evidence was required to be properly documented and submitted to the SMSF auditor for the annual SMSF audit.

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