ATO extends relief for SMSF trustees

A range of relief measures introduced by the ATO in response to the COVID-19 pandemic will be extended to cover the 2021–22 financial year.

The ATO said it recognised the “significant financial effects” of COVID-19 on SMSFs, especially in regions affected by lockdown restrictions.

“As a result, you may still find yourself in a position where you (in your role as trustee), or a related party of the fund, are having to provide or accept certain types of relief, which may give rise to contraventions under the super laws,” the ATO said.

SMSF residency, rental, loan repayment and in-house asset relief offered by the ATO for the 2019–20 and 2020–21 financial years will now be available for the current financial year.

The ATO said it recognised that border closures and travel restrictions have meant that individuals may have remained overseas for more than two years, potentially affecting residency conditions that determine whether an SMSF can be classified as an Australian super fund for tax purposes.

“Provided there are no other changes in the SMSF or your circumstances affecting the other residency conditions, we will continue to not apply compliance resources to determine whether the fund meets the residency test,” the ATO noted.

Compliance action will not be taken against an SMSF (or a related non-geared company or unit trust) that provides rental relief to a tenant “in the form of a reduction, waiver or deferral” if it gives rise to a contravention of super laws. The relief must be offered “on commercial terms (having regard to state and territory COVID-19 support measures) due to the financial impacts of COVID-19” and the arrangement must be properly documented.

The ATO will also not take compliance action “if loan repayment relief is provided by an SMSF to a related or unrelated party due to the financial impacts of COVID-19, and the relief is offered on commercial terms and the changes to the loan agreement are properly documented”.

In situations where an SMSF has exceeded the 5 per cent in-house asset threshold as of June 30 2021 due to the financial impacts of the pandemic, a written plan to reduce assets to below the 5 per cent threshold by June 30 2022 must be prepared. However, compliance action will not be taken if the financial impacts prevent this plan from being executed.

“For example, because you are unable to execute the plan because the market has not recovered in some areas, or it may be unnecessary to implement it as the market has recovered,” the ATO explained.