Self-Managed Superannuation Funds And COVID-19 Measures

A man is clicking on a calculator while holding some US ITR documents with a pen and notebook beside him, possibly preparing for tax season or financial planning with the help of a tax accountant.

You may be aware that the Government recently announced measures that permit individuals impacted by the economic consequences of COVID-19 to access a restricted portion of their superannuation early. Likewise, rental relief for tenants of your SMSF property may also be accessible. In such cases, consulting SMSF accountants can provide valuable guidance and assistance.

Accessing your superannuation early

Deciding to access your superannuation early is significant and, if possible, should be encompassed by financial advice.

The Australian Taxation Office has now released guidance on accessing superannuation early from SMSFs to assist in cushioning the adverse economic effects of Coronavirus.

How much can you take out?

You can apply online through the myGov website ( to access up to $10,000 of your superannuation before 1 July 2020.

You can access a further $10,000 of your super from 1 July 2020 until 24 September 2020.

You will only be able to make one request for each financial year. For example, should you nominate for a lesser withdrawal amount in 2019/20, you will not be able to apply again before 1 July 2020 for the remainder, nor will you be able to apply for more than $10,000 from 1 July 2020.

If you access your superannuation, you will not be required to pay tax on amounts released, and any amounts withdrawn will not affect your Centrelink or Veterans Affairs payments. These amounts will also not be included in your assessable income for the financial year the withdrawal is made.

Satisfying early release requirements

The legislation intends that you are adversely affected by the economic impacts of COVID-19 and require early access to your superannuation which is ordinarily preserved until your retirement.

To apply for early release of your superannuation, you must satisfy one or more of the following requirements:

  • You are unemployed.
  • You are eligible for a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
  • On or after 1 January 2020, any of the following happened:
    • You were made redundant.
    • Your working hours were reduced by 20% or more.
    • You were a sole trader, your business was suspended, or your turnover decreased by 20% or more.

These are the only requirements that must be considered.

How to apply to access your superannuation

You can register your interest to access through the myGov website. If you satisfy one or more of the requirements entitling you to access your superannuation early, you would have been able to do so from mid-April.

After applying through myGov, the ATO will issue you a determination advising your eligibility to release an amount. Only once your SMSF receives your determination will the trustee be authorised to pay. Suppose you apply to access superannuation benefits from a non-SMSF. In that case, the ATO will issue the determination directly to the APRA-regulated funds, and the trustee will proceed to release your benefits to a nominated bank account.

Providing rental relief for the tenant in your SMSF property

If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This may even be true when the tenant is a related party or yourself.

Ordinarily, charging a tenant a price less than market value in an SMSF is usually a breach of superannuation laws. However, the ATO has provided guidance which allows SMSF landlords to provide for a reduction in or waiver of rent because of the financial impacts of COVID-19.

For the 2019–20 and 2020–21 financial years, the ATO will not take action where an SMSF gives a tenant – who may also be a related party – a temporary rent reduction during this period.

What do you need to do?

There are some essential things you should ensure are in place when providing a rent reduction to a tenant, especially when this is a related party.

  • Ensure the relief only applies to rent.
    • Any relief offered to a tenant can only relate to the rent component of the lease agreement. The ATO concession does not extend to other lease incentives.
  • Ensure that the reduction in rent is only temporary.
    • This means it should have an agreed period of time or agreed date where the rent is reviewed in light of the economic circumstances.
  • The tenant’s financial difficulty is linked to the financial impacts of COVID-19.
    • Any negotiated rent relief will need to be measured against the COVID-19 financial impact suffered by your tenant.
  • Precise arrangements which detail the amount of discount, waiver or deferral of the rent.
    • In evidence that the rent relief is reasonable, it would be best practise if it is consistent with an approach taken by an arm’s length landlord.
  • Ensure you have proper documentation which allows your independent auditor to be satisfied that the temporary rent relief satisfies all of the above.
    • This may take the form of a signed minute, renewed lease agreement or anything deemed appropriate to amend the lease terms temporarily.
    • Even if you are both the tenant and landlord, the above should all be documented.

These are extraordinary times, and the ATO provides this guidance to allow SMSF trustees to be flexible and agile.

If trustees act in good faith in implementing a reasonable and measured reduction in rent because of the impacts of COVID-19 they should not fall foul of the law.

Kreston Stanley Williamson Team

*Correct as of May 2020

Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.

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