Regulation Round - Up

Louise Biti Director, Aged Care Steps Aged Care Steps (AFSL 486723) specialises in the development of advice strategies to support financial planners, accountants and other service providers in relation to aged care and estate planning. For further information refer to agedcaresteps.com.au

AGED CARE STEPS COVID-19 early access to super

Coronavirus Economic Response Package Omnibus Bill 2020 ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355

Limited early access to super can be claimed by eligible people affected by the COVID-19 crisis who:

• are unemployed, or

• are eligible to receive the JobSeeker payment (including the youth allowance), parenting payment, special benefit or farm household allowance, or

• since 1 January 2020 have been made redundant or had working hours reduced by at least 20 per cent or are sole traders whose business has been suspended or experienced a 20 per cent or more turnover reduction.

Eligible citizens and permanent residents of Australia and New Zealand will be able to apply to withdraw up to $10,000 in 2019/20 and another $10,000 in 2020/21. Eligible temporary residents can only make a withdrawal in 2019/20.

Financial planners who give advice on this measure will not need to provide a statement of advice, but a record of advice needs to be kept on file and a copy given to the client. Accountants who do not operate under an Australian financial services licence will be able to give advice to existing clients. In both cases, for the exemptions to apply, the fee charged for advice cannot exceed $300. No unsolicited spruiking of this service is allowed. AUSTRAC has introduced measures so super funds do not need to carry out their customer identification procedures when making these payments.

COVID-19 rent relief and other matters

National cabinet rent relief code

This code imposes principles where a tenant of a commercial property is an eligible small to medium-sized enterprise that qualifies for the JobKeeper program.

Under the code, landlords will not be allowed to terminate leases due to non-payment for a relevant period of time. Landlords will also need to negotiate proportionate reductions in rent payable as waivers or deferrals of rent. The ATO announced if SMSFs that rent commercial properties to non-related parties off er rent relief or reductions under these provisions during 2019/20 and 2020/21, compliance action will not be taken. Industry experts are recommending against abusing this concession and best practice should ensure similar provisions to arm’s-length arrangements are implemented. No relief has been extended for meeting in-house asset ratios or investment strategy requirements. Trustees should check they meet obligations before 30 June, particularly taking into consideration the impact of share market downturns.

COVID-19 deferral of tax return lodgement dates

To assist with managing workloads during the COVID-19 crisis, the ATO has announced extensions to the deadlines for submitting 2019/20 tax returns.

The deadline for lodging the 2019/20 SMSF annual return has been extended to 30 June. The deadline for companies has moved to 5 June. Other entity types can also defer lodgement until 5 June, provided they pay any liabilities by that date.

The lodgement and payment dates for 2019/20 fringe benefit tax returns has been deferred to 25 June.

Changes to 2020 SMSF annual return

The SMSF annual return form is expected to be available at the end of May. Several changes have been made, including:

• label H – a property count label is included to report the number of real properties held that are under a limited recourse borrowing arrangement,

• anti-detriment label – this deduction can no longer be claimed so the label has been removed, and

• auditor qualification question – changes have been made to this label around reporting issues.

Property development investments

SMSF Regulator’s Bulletin SMSFRB 2020/1

The ATO has expressed concerns about the use of ungeared related companies/unit trusts to invest in property developments due to an increase in these strategies. The warning was made that the required conditions need to be met at the time of acquisition, as well as the entire time the investment is held.

The bulletin lists a number of concerns raised by the ATO and provides guidance for trustees and advisers to set up these strategies appropriately.

Over-65 contributions to super

Treasury Laws Amendment (Measures 4 for a later sitting) Bill 2020: Improving Flexibility for Older Australians

Exposure draft legislation was released to seek feedback on the measures to allow people aged 65 and 66 to make personal contributions without meeting the work test and increasing eligibility for spouse contributions to age 74. The consultation period has closed and legislation needs to be introduced into parliament.