www.esuperfund.com.au

Covid-19


The government has enacted legislation to support its economic response to novel coronavirus (COVID-19) to help the economy withstand and recover from the economic impact of coronavirus. This page summarises the changes that may affect SMSF members. The contents of this page will be updated as we know more.


 
 
1. Giving Individuals Early Access to Their Superannuation

While superannuation helps people save for retirement, the Government recognises that for those significantly financially affected by the coronavirus, accessing some of their superannuation today may outweigh the benefits of maintaining those savings until retirement.

How much can you access if you are eligible?

Eligible individuals will be able to apply to access up to:

  • $10,000 of their superannuation before 1 July 2020;
  • A further $10,000 from 1 July 2020 until 31 December 2020 (extended from 24 September 2020).

Who is eligible for the early release of superannuation due to coronavirus?

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

  • You are unemployed.
  • You are eligible to receive 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, either 
    • You were made redundant;
    • Your working hours were reduced by 20% or more;
    • If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
There is no requirement that you are already receiving Commonwealth income support payments and there is no waiting period. In addition, there are no income or assets tests. For example, even someone with a very high salary who remains employed and has other assets could access this payment as long as their working hours have been reduced by 20% after 1 January 2020. 

How to apply for an early release of superannuation due to coronavirus?

Applications for early release of superannuation can be made through myGov. If you don't already have a myGov account, you can set one up by selecting "create an account".

Applications for the 2020-21 Financial year can be made from 1 July 2020 to 31 December 2020 (extended from 24 September 2020). Importantly, if you have previously applied and accessed your superannuation in the 2019-20 Financial Year and wish to access a further amount up to $10,000 in the 2020-21 Financial Year, you will need to submit a new application through myGov provided you still meet the eligibility.

If your application is successful, the ATO will issue a determination evidencing your eligibility which will be sent to your myGov inbox. Importantly you must not access your superannuation before the ATO confirms your eligibility and approves your application.

My application cannot proceed since my SMSF is not recognised by the ATO, how can I apply?

Your SMSF is not recognised by the ATO, usually caused by one of the following reasons:

  • Your SMSF was established in the current Financial Year and no Annual Return has even been lodged with the ATO. As a result, the ATO does not have your SMSF information;
  • Your SMSF was established in a previous Financial Year but had not transacted until the current Financial Year. Since no Annual Return has been lodged with the ATO, the ATO does not have your SMSF information;
  • Your SMSF was established in a previous Financial Year but has one or more overdue Annual Return(s).

In the above scenarios, you need to phone the ATO directly on 13 10 20. The ATO operator will verify your identify and help you to complete the application over the phone. When contacting the ATO, you may be requested to provide the SMSF's name, ABN or TFN, your personal TFN, and if applicable, the reference number detailed on an ATO notice.

My application has been approved by the ATO, do I need to send the outcome letter to ESUPERFUND now?

No. Please retain the approval letter for your own records at this stage. The document should be provided as part of the checklist completion process.

Will ESUPERFUND release my super benefit to my bank account or do I transfer funds myself?

Please note that ESUPERFUND does not have transaction access to your SMSF bank account and we are not authorised to make any payments on your behalf.

Provided your account balance in the SMSF is greater than the release amount specified on the ATO letter, you can transfer cash from your SMSF bank account to your personal bank account.

I do not have sufficient cash in the SMSF bank account, what should I do?

We caution that you can only make a single payment for each application approved. If your SMSF has insufficient cash, you need to convert some investments to cash (i.e. sell the asset and deposit proceeds into the SMSF bank account) and then withdraw the entire amount in one single transaction.

Are there any adverse consequences if I choose to withdraw this payment?

The following table summarises the potential consequences of this payment on your other interests:

Consequences
Personal Tax None. You will not need to pay tax on amounts released due to coronavirus.
Social Security Payments None. The money you withdraw due to coronavirus will not affect your Centrelink or Veterans’ Affairs payments.

Insurance Cover

  • Income Protection;
  • Life / Total Permanent Disability.
Possible. Insurance may not be available if you fully withdraw your superannuation or your superannuation balance reduces to less than $6,000. Consider whether you need to seek financial advice before submitting your application to the ATO.

What documentation does ESUPERFUND require if I withdraw this payment?

If you access your superannuation under this special provision, you will be required to provide a copy of the ATO’s determination for audit purposes as part of the checklist completion process.

 
 
2. Temporarily Reducing Superannuation Minimum Withdrawal Limits

The Government is temporarily reducing superannuation minimum withdrawal limits for Pensions by 50% for the 2019-20 and 2020-21 Financial Years. This measure will benefit individuals with Pensions (SABP/TRIS) by reducing the need to sell SMSF assets to fund minimum drawdown requirements.

Age Range Default Minimum Pension
Factor
Reduced Minimum Pension Factor
for 2019-20 and 2020-21
Under 65 4% 2%
65 - 74 5% 2.5%
75 - 79 6% 3%
80 - 84 7% 3.5%
85 - 89 9% 4.5%
90 - 94 11% 5.5%
95 or more 14% 7%

Are there any changes to the maximum withdrawal limits (in the case of a TRIS)?

No. The maximum withdrawal limits (in the case of a TRIS) are still calculated as 10% of the Pension Balance. There is no reduction in the maximum withdrawal limits.

Where can I find my minimum/maximum withdrawal limits for my Pension?

You can view your minimum and maximum withdrawal limits via your Client Portal - ‘Member Accounts’ - 'Pension Summary' tab. The minimum withdrawal limits shown on the Pension Summary are the reduced amounts.

Please note that if you have commenced Pensions in the prior Financial Year, the minimum and maximum withdrawal limits for the current Financial Year can only be accurately calculated after your SMSF's prior year's Annual Returns have been completed.

I have already withdrawn my original minimum withdrawal amount for my Pension, can I reimburse the excess back to the SMSF?

No. If you have already withdrawn more than the reduced minimum withdrawal limit, unfortunately you cannot reimburse the SMSF. Any such amount would be considered a contribution and be subject to the contribution rules. Please visit our website here for more information on contribution rules and caps.

In addition, you cannot forgo making any withdrawals in the following Financial Year.

 
 
3. Will ESUPERFUND’s business be affected by the Covid-19 crisis?

We advise that ESUPERFUND is continuing to operate as normal in these unprecedented times. We understand the COVID-19 situation may create uncertainty or financial pressure for some of our clients. Accordingly should you have any queries or concerns regarding your SMSF, feel free to contact our office via your Client Portal Inbox.

However there have been some issues relating to the third party providers used by our clients (such as CBA, ANZ and the ATO). Accordingly some clients may be experiencing longer than usual processing times for the establishment of their SMSF or for other applications submitted to third party providers. Please be assured that the ESUPERFUND team in conjunction with the third party providers are working incredibly hard to ensure clients applications are processed as timely as possible.

It should be noted that we are also experiencing some delays in receiving important data from our providers which may delay the updating of information in the Client Portal. We appreciate your patience during this time and the ESUPERFUND team will endeavour to ensure that all information is updated in the Client Portal as soon as it becomes available.

 
 
4. Other Supports during the COVID-19 Crisis

Can I claim any Centrelink Benefits if I am affected by the novel coronavirus?

We advise that ESUPERFUND cannot provide advice on social security entitlements. Please visit the Services Australia website - Affected by coronavirus (COVID-19) or contact Centrelink directly to verify your personal circumstances.

I have an income tax payment due to be paid to the ATO but I cannot afford it, can I request a payment extension from the ATO?

Yes. If you need further assistance managing your tax and super obligations, please contact the ATO’s Emergency Support Info line on 1800 806 218. You can talk to someone in your language Monday to Friday between 8am to 5pm. Call the Translating and Interpreting Service (TIS National) on 13 14 50. Tell the operator the language you speak and ask them to phone the ATO on 1800 806 218.

My investment earnings reduced significantly due to COVID-19 but my PAYG Instalments were estimated based on my last SMSF Annual Return, can I vary the PAYG Instalments amount down?

Yes. PAYG instalment is an estimate made by the ATO based on your SMSF’s previous years’ assessment and is essentially a prepayment of your SMSF‘s tax liability for the current Financial Year.

If your SMSF is a pay as you go (PAYG) instalments payer and the registered tax agent for your SMSF’s activity statements is ESUPERFUND, you will receive the activity statements from our office via the Client Portal Inbox under the subject ‘PAYG Instalments and GST’.

If the instalments you have been paying will be more than the tax liability you will owe at the end of the year, you can vary the instalment amount on your next activity statement. Where you choose to vary your PAYG instalments, the ATO has confirmed that they will not apply penalties or charge interests to varied instalments for the 2019–20 Financial Year.

I cannot afford the loan repayments associated with my SMSF property, what options do I have?

We suggest you to contact your lender immediately to discuss your circumstances and options available to you. Some banks offer repayment relief for home loan customers.

Can I offer rental relief to the tenants of my SMSF property due to the financial impacts of the novel coronavirus?

Yes. The ATO has confirmed that SMSFs can provide tenants with a temporary rent reduction, including to tenants who are a related party or related trust, and where a member, relative or a related party/trust has an underlying economic interest in the tenant.

While this would normally trigger a range of SIS Act compliance breaches, the ATO indicated that it won’t be taking compliance action for either the 2019-20 or 2020-21 Financial Years if the three requirements below are met:

  • The rental relief is at arm’s length terms, which must be reasonable and measured to the COVID-19 impact suffered by the tenant
  • The rental relief must be offered as a result of the impacts of COVID-19
  • Appropriate documentation must be put in place reflecting the rental relief arrangement.

If you have decided to provide rental relief to your tenant, please properly document the rent reduction that is agreed to as it is an amendment to lease terms. A copy of this document should be provided to ESUPERUND for audit purposes as part of the checklist completion process.

I have previous informed ESUPERFUND to cancel/windup my SMSF and now I have changed mind since I don’t want to dispose of my SMSF shares. Can I maintain my SMSF?

Yes. Please contact our office via the Client Portal Inbox if you decide to withdraw your winding-up application. In this case, your SMSF will be required to lodge a normal Annual Return for the current Financial Year as well as for future Financial Years. You will be required to pay any outstanding annual compliance fee before we can re-instate your SMSF. In addition, if you have already rolled over / withdrawn your super benefits, you will need to re-activate your SMSF via contributions (subject to normal contribution rules) / rollovers.

Any other difficulties that you wish to discuss / raise to the ATO?

If your situation is not covered in any of the above sections, please refer to the following useful resources: