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Relief for SMSFs

Due to the ongoing economic impacts of Covid-19 on large parts of Australia, the ATO has announced the extension of various Covid-19 relief measures for trustees of self managed superannuation funds (SMSFs). The relief previously only applied to the 2019-20 and 2020-21 financial years, but will now also be available for the 2021-22 financial year.

Rental Relief

If an SMSF or a related party has continued to provide rental relief based on the current market conditions, whether it be a rental reduction, waiver or deferral to a tenant, the ATO will provide relief in the form of not taking any compliance action against the fund. However, this is predicated on the rental relief being offered on commercial terms, and there being proper documentation with regards to the arrangement.

Loan Repayment Relief

For loan repayment relief provided by a SMSF to a related or unrelated party due to the financial impacts of Covid-19, where the relief is offered on commercial terms and the changes to the loan agreement are properly documented, the ATO will provide relief on similar terms as the interim rental relief – that is, it will not take any compliance action against the fund. This will also apply to limited recourse borrowing arrangements (LBRAs).

In-House Assets

Where an SMSF exceeds the 5% in-house asset threshold at 30 June 2021 due to the financial impacts of Covid-19, trustees 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. However, the ATO has said it will not take any compliance action where the plan has not been executed by the due date as a result of the market not having recovered, or in some cases the plan may be unnecessary because of market recovery.

PAYG Variations

The ATO has confirmed that its penalty and interest relief for excessive PAYG variations applies to SMSFs that continue to be impacted by Covid-19 during 2021-22. The ATO will not apply penalties or interest for excessive variations of PAYG instalments during the 2021-22 income year, provided that the taxpayer has taken reasonable care to estimate their end-of-year tax.

Audits

The ATO has also extended to 2021-22 its existing Covid-19 relief in the Addendum to the Auditor/Actuary Contravention Report (ACR). The ACR relief for 2021-22 will apply for rental relief (including rental reductions, waivers and deferrals), loan repayment relief (including LBRAs), and in-house assets.


TIP: If you’re a trustee of a SMSF and you or your fund’s members have been affected by Covid-19, we can help you work out the potential tax implications and relief available, and put the proper documentation in place.


The information contained on this website and in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website and in this article are of a general nature only and are based on our interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

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