The ATO has communicated to the SMSF Association its commitment to explore measures by which it can provide financial hardship relief to SMSF trustees during this current round of COVID-19 lockdowns.
Specifically, the regulator is examining areas such as the viability of extending rental relief, loan repayment relief and in-house asset relief to 30 June 2022, the association revealed on its Twitter account.
According to the industry body, the coronavirus-driven lockdowns in 2021 have made it particularly difficult for SMSFs holding property, as well as those funds with a limited recourse borrowing arrangement (LRBA) in place, due to a lack of general parameters set for the broader economy regarding landlords and loans.
“Without a national code setting leasing principles to assess ongoing rental relief eligibility or uniform relief from the [banking sector] for ongoing loan repayment relief, verifying eligibility for any potential extension will raise practical issues for SMSFs,” the association noted.
“More so, for SMSFs dealing with related parties, where they will be required to establish that any relief accessed is on commercial terms and commensurate with relief on offer to arm’s-length parties and properly documented.”
The SMSF Association revealed it will be pursuing avenues of COVID-19 financial relief during the current lockdown period.
“We will continue to advocate for an extension to COVID-19 relief for SMSFs still experiencing financial difficulties and will work closely with the ATO to ensure these relief measures are as practical as possible,” it said.
In 2020, the ATO issued SPR 2020/2 – “Self Managed Superannuation Funds (COVID-19 Rental income deferrals – In-house Asset Exclusion) Determination 2020”, allowing SMSF landlords to grant rental relief without falling foul of their compliance obligations.
Further, the regulator allowed SMSFs with an LRBA in place, including those involving related parties, to seek loan repayment relief with an assurance these pacts would not see the fund caught by the non-arm’s-length income rules.''