As the new financial year commences, the COVID-19 pandemic leaves its lasting effects on people’s lives in various ways. In the face of these unparallelled circumstances, it becomes crucial for SMSF accountants to ensure that trustees fulfil their annual regulatory obligations and maintain compliance throughout the upcoming year. The ever-changing economic landscape, coupled with the ongoing impact of the pandemic, underscores the need for proactive financial management within the realm of SMSFs.
Reduced minimum pension requirements
The 50% reduction in the minimum pension requirement that was announced on 24 March 2020 will continue to apply in the 2020-21 financial year as follows:
| Age at 1 July 2020 | Reduced Minimum Percentage |
| Under 65 | 2% |
| 65 – 74 | 2.5% |
| 75 – 79 | 3% |
| 80 – 84 | 3.5% |
| 85 – 89 | 4.5% |
| 90 – 94 | 5.5% |
| 95 and over | 7% |
Tip: If you have direct debits from your SMSF bank account, you may wish to review these to account for the reduction in the minimum pension.
COVID-19 early release of super
For those that have been adversely financially impacted due to COVID-19, the early access to superannuation continues this financial year, provided the eligibility criteria are met.
You can apply online through the myGov website (https://my.gov.au/) to access up to $10,000 of your superannuation before 24 September 2020.
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), particular 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.
After applying through myGov, the Australian Taxation Office (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.
Contribution changes
Catch-up concessional contributions
From 1 July 2018, if you had a total superannuation balance of less than $500,000 on 30 June of the previous financial year, you may have been entitled to start accruing the unused portion of your $25,000 concessional cap. The unused concessional cap can then be added to your current year cap, allowing a concessional contribution of over $25,000 in the 2020-21 financial year.
Spouse contributions
From 1 July 2020, spouse contributions can now be made for spouses aged between 67 to 75 (up to 28 days in the month after the spouse turns 75). However, the spouse must still meet the work test before the spouse’s contribution is made.
Work test abolition for individuals aged 65 and 66
From 1 July 2020, people aged between 65 and 66 can make voluntary contributions (previously restricted to people below 65) without meeting a work test. This applies to both concessional and non-concessional contributions.
Bring forward non-concessional contributions for those aged 66 to 67 – not yet legislated.
Unfortunately, when writing this article, we still await the passing of the legislation to enable those individuals turning 66 and 67 to trigger the non-concessional bring forward rule.
As always, don’t hesitate to reach out and contact us if you have any queries with the above.
Kreston Stanley Williamson Team
*Correct as of August 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.
