The ATO has released guidelines which indicate a welcome relaxation of the strict superannuation regulations which threatened to cause issues for trustees of self-managed super funds (SMSF). As a result of COVID-19, many funds are struggling to pay minimum pensions and many related party businesses are struggling to meet their rental payments to the SMSF.

The relief that has been granted for SMSF are as follows: –

– halving of minimum pension withdrawals required for the 2020 and 2021 financial years. This will help SMSF avoiding needing to sell investments during a downturn in the market to finance these pension.

– relaxation of the 5% in-house asset limits. Usually a SMSF is only able to hold in-house assets such as loans to related parties up to a 5% limit of the fund’s total assets. With the downturn of financial markets, many loans previously compliant may now be in breach. Although this will still be a breach, the ATO has indicated it will not seek to use compliance resources to follow up those SMSF’s impacted due to the downturn in the market. They will give these funds more time to implement measures to correct the breach.

– relaxation of the need for related parties to pay rent on commercial facilities. Usually if a related party falls behind on rental payment it can cause major breaches and ramifications for a SMSF landlord. This relief measure confirms that SMSFs will be able to reduce the rental payments required just like any commercial landlord has been recommended to do and this will not lead to a breach that the ATO will follow up.

If you have any queries about your SMSF, please do not hesitate to contact us.