The SMSF Association has downplayed the possibility of any legislative amendments that would allow a greater number of taxpayers to access their superannuation early as a COVID-19 financial relief measure.
Currently the eligibility for the relief measure is based upon a reduction in the working hours of individuals as opposed to a reduction in pay, and SMSF Association chief executive John Maroney said people should not have an expectation this stipulation will change.
“I think it’s unlikely that there will be legislative change, which then comes down to whether the tax commissioner has discretion in this area and my understanding is he doesn’t,” Maroney said.
Concerns have been raised as a result of situations where employees are working the same hours but are being paid less due to a reduction in their remuneration.
Maroney’s suggestion was for these situations to be negotiated between employers and employees to arrive at a more acceptable outcome.
“It may well be [a matter of] the pay cuts being negotiated between employers and their employees [and] that it’s documented with a notional hour cut if that’s appropriate to the circumstances. Again, it has to be realistic in terms of what is anticipated,” he advised.
Smarter SMSF chief executive Aaron Dunn agreed with Maroney’s assessment, noting the legislation was deliberately drafted to reflect its current form.
“It would have been very deliberate around the definition of working hours as a reduction because that is what the intent of COVID [relief] was meant to be,” Dunn noted.
“It was a function initially of the fact that working hours were impacted by [the coronavirus pandemic].
“Now sure we’ve seen a whole range of people who have looked to cost cut and reduce wages, but still ask people to continue to work. The reality is those people still have jobs, granted they might be on less pay, but [to cover these situations] was not what the policy intent was in the first instance.”
Last month, the ATO released details of how individuals could access their retirement benefits early under this instrument.
Early access of superannuation benefits, tax commissioner.
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