Due to the recent emergence of COVID-19 in 2020, the government has implemented new rules in order to provide additional support to SMSF Members. Members dealing with these adverse economic effects may be able to access their super on compassionate grounds in certain circumstances. For more information, see our COVID-19 Relief page here.

The COVID-19 crisis has caused the following significant effects to SMSFs:

Pension rates

COVID-19 has negatively impacted the account balance of the superannuation pension and annuity for many retirees. To assist retirees, the government has reduced the minimum annual payment required for account-based pensions by 50% in the 2019-20 and 2020-21 financial years. The Government has decided to extend the temporary relief for a further 12 months. It will not apply to defined benefit income streams (as is currently the case). See their Covid FAQ here.

Minimum Payments

Depending on your age, you must withdraw a minimum amount from the Account based Pension each year. Please see the table below for the updated percentages linked with the different age categories:

Age of recipient Reduced rates by 50% for the 2019-20 and 2020-21 income years (%) Reduced rates by 50% for the 2010-21 and 2021-22 income years (%)
Under 65 2% 2%
65 – 74 2.5% 2.5%
75 – 79 3% 3%
80 – 84 3.5% 3.5%
85 – 89 4.5% 4.5%
90 – 94 5.5% 5.5%
95 or more 7% 7%

For more information on account based pensions, please see here.

Early access to superannuation

Individuals in financial stress as a result of COVID-19 will be allowed to access up to $10,000 of their superannuation in 2019-20 year and another $10,000 in 2020-21 year. This is easier than meeting the normal conditions of release such as severe financial hardship and compassionate grounds. In addition, these superannuation withdrawals are tax-free and do not need to be included when lodging your personal Tax Return.

Eligible Members can apply online through myGov to access up to $10,000 of their superannuation until 31 December 2020. Eligible Members can only make one withdrawal as a lump sum payment in each financial year and they can only withdraw from their own superannuation account.

Members will be eligible to access their superannuation if one or more of the following criteria are met:

  • You are unemployed
  • You are eligible to receive either:

– Job seeker payment,
– Youth allowance for jobseekers (unless you are undertaking full-time study or are a new apprentice),
– Parenting payment (which includes the single and partnered payments),
– Special benefit, or
– Farm household allowance.

  • On or after 1 January 2020 either:

– You were made redundant,
– Your working hours were reduced by 20% or more, or
– Your business was suspended or there was a reduction in your turnover of 20% or more, if you are a sole trader.

If you are eligible and apply for early access to super through myGov, the ATO will then issue you with a determination advising of your eligibility to release the amount. Once your SMSF receives the determination from you, they will be authorized to make the payment.

For more information, please refer to the ATO COVID-19 early release of super page.

Rent Relief

Due to the negative economic impact of COVID-19, a temporary rent relief provision has been introduced. SMSFs with investment properties can choose to provide a temporary rent reduction, waiver or deferral to tenants if it is in the best interest of your Fund. This includes SMSFs leasing commercial properties to related parties. The ATO announced that they will not be taking action against SMSFs that decide to provide rent relief during the 2020 and 2021 financial years. The Tax Office also announced that SMSFs with an interest in a non-geared company or unit trust that leases property to a tenant will not be treated as an in-house asset for the current and future financial years affected by COVID-19.

The following can offer some guidance to help ensure Trustees stay compliant when providing rent relief:

  • Checking documents such as lease arrangements and loan documents to confirm what the current provisions are for supporting tenants.
  • Considering if a rent relief is in the best interest of the SMSF and considering alternatives such as eviction or replacing the tenant.
  • Obtaining sufficient evidence to justify that the need for rent relief is reasonable and measured to the COVID-19 impact.
  • Properly documenting any temporary changes to the terms of the current lease agreement. This could be in the form of a renewed lease agreement, creating a minute to document the temporary changes or a variation to the lease drafted by a legal practitioner. 

Re-contribution of COVID-19 early release payment

If a Member withdrew money as a part of the COVID-19 early release super program, they can re-contribute it back into the SMSF without attracting any tax.

Members will need to meet all the criteria below before making the re-contribution:

– Withdrew super money from the SMSF via COVID-19 early release super program
– The total amount, including any previous COVID-19 re-contributions, that will be re-contributed is equal to or less than the total amount accessed via COVID-19 early release
– Provide the approved form notifying the Trustees of the SMSF of the re-contribution on or before the contribution is made
– Re-contribute between the period 1 July 2021 and 30 June 2030
– A Member cannot claim a deduction for amounts they re-contributed

Remember to fill out the Notice of re-contribution of COVID-19 early release amounts (NAT 75394) form if you choose to make a COVID-19 re-contribution amount.

For information on re-contribution of Covid-19 payments, please refer to the ATO re-contribution page.

FAQs (click on the question to reveal the answer)

Q: Has the ATO extended the due date for lodging SMSFs?

A: The ATO have extended the lodgment for the 2019 Financial Year Return regarding all Self-Managed Super Funds to 30 June 2020. For further guidance on the Covid-19 deferrals regarding SMSF annual returns, please see here.

Q: When will I be able to apply for the COVID-19 early access to my super for the 2020 and 2021 financial years?

A: The ATO will accept applications for the early access to super through myGov from 20 April 2020.

Q: How long will it take for the ATO to process my application for the COVID-19 early access?

A: The ATO have stated that it will take them up to four business days to process myGov applications for the early access to Super. The ATO will send you a letter of approval or rejection to your myGov inbox, so please be sure to check this regularly after applying.

Q: If I am receiving JobKeeper payments, does my employer have to pay superannuation on this income?

A: The government has announced that it will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper payments.

You can also refer to this link for the ATO’s guidance on COVID-19 for SMSFs.

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