Must know SMSF Changes during COVID-19

SMSF Account-Based Minimum Pension Requirements

As you are no doubt aware COVID-19 is placing hefty restrictions on society and is causing many changes to our day-to-day lives. This has caused a massive drop in the stock market and consumer confidence which in turn may be hurting your SMSF, and available cash; and ideally you don’t want to be drawing down on your capital unless absolutely necessary.

Very recently, treasury has made announcements in regards to changes for account-based pensions in SMSF’s and having their minimum pension requirements lowered (much like after the GFC from 2009 – 2013), so you are not forced to draw down on too much of the capital of your fund in these trying times.

Age as at 1st July 2019Minimum Pension Factor (%) for 2019Revised Minimum Pension Factor (%) for 2020 & 2021
Under 654%2%
65-745%2.5%
74-796%3%
80-847%3.5%
85-899%4.5%
90-9411%5.5%
95 +14%7%

As per the above table, these new minimum pension requires will be in place for the 2020 and 2021 financial years. If you have already drawn down above these new revised amounts; no further pension requirements will be necessary for the financial year. If you are yet to draw down your pension requirements, please be aware that your minimum amount has most likely lowered from any figures we reported to you earlier in the financial year.

If you have already taken above your minimum pension requirements, there is currently no facility to put money back in, outside of the current contribution rules.

Please be aware that in this uncertain time, the ATO is announcing new things daily, and we will try to keep you as informed as possible on anything that may involve your superannuation fund.

Temporarily reducing rent for a SMSF

Many of our clients operate their business from a property that their SMSF owns. This, is completely fine, so long as the property is deemed “business real property” and rent and obligations are kept on a commercial and arms length basis.

In this current environment, in actual arms length arrangements, landlords are giving rent relief to their tenants. So where does this leave those with a related party landlord and tenant arrangement with an SMSF holding the property? Especially since some of these business have been either closed or incurred severely reduced revenue.

Please read the below Q & A which should give some clarity on this. As always, please contact us for further information.

Contact

Suite 13, 241 Blackburn Road Mount Waverley VIC 3149

Phone: (03) 9802 2533

Fax: (03) 9802 0590

Postal Address: PO Box 323, Mount Waverley, Victoria 3149

Email: mail@rogersonkenny.com.au

ABN: 29 545 604 022