Super Guarantee (SG) Contributions on JobKeeper Payments
Under the JobKeeper Scheme, employers are only required to pay Super Guarantee (SG) on the amount payable to an employee in respect of their hours actually worked, disregarding any extra payments made by the employer to satisfy the JobKeeper wage conditions.
For example, if the work actually undertaken by an employee entitles them to be paid $1,000 per fortnight, but they were paid $1,500 JobKeeper, the employer is only required to pay SG on the $1,000.
Similarly, if an employee is entitled to be paid $2,000 for their work, the employer is required to pay SG on that amount.
If an employer is “stood down” the employer has no obligation to pay any SG. This is also the case if the stood down employee is receiving JobKeeper but not undertaking any work.
Self Managed Superannuation Fund (SMSF) Investment Strategies
The significant downturn in investment markets has obviously affected the investments held by many SMSFs. The ATO have confirmed that if the assets of an SMSF, or the level of investments in those assets, fall outside of the scope of the investment strategy, action is needed to address that situation which could involve:
- Adjustments to investments, or
- Updating the investment strategy and giving effect to it.
SMSF Business Real Property – Rent Relief for Tenants Suffering Financial Distress Due to COVID-19
The ATO has signaled that given the current economic situation, they will rely on the obvious evidence at a national level that some form of rent relaxation is normal, commercial and expected between any landlord and a tenant affected by COVID-19.
The important thing will be ensuring that the relief:
- Was offered as a direct consequence of the adverse economic effects of COVID-19
- Is necessary, and
- Is temporary
Rent relief can take the form of a rent waiver and/or a rent deferral.
There will be need for the fund trustees to prepare documents in relation to any form of rent relief. Our office is happy to assist you with the necessary documentation.
The ATO has advised that any rental relief given by SMSFs will not affect the deductibility of the rental property’s expenses.
Reduction on Pension Drawdown Rate for the 2019/20 and 2020/21 years
One of the consequences of COVID-19 has been significant falls in investment markets. In a similar approach to the one taken during the Global Financial Crisis, the Government has provided special short term reductions in the minimum payments required from pensions.
The minimum pension drawdown rates have been reduced by 50%.
Early Access to Superannuation Benefits – “Compassionate Ground – Coronavirus”
A new condition of release known as “compassionate ground – coronavirus” has been added to the superannuation law. This new conditional of release allows for eligible persons to assess a portion of their preserved super benefits to assist the person to deal with the adverse economic effects of the coronavirus.
To be eligible to apply for the early release, you must need the funds to assist you to deal with the adverse economic impacts of COVID-19. If this initial criteria is satisfied, there are additional eligibility rules to be considered.
Eligible individuals can apply to access up to $10,000 before 1 July 2020. A further amount of up to $10,000 may be applied for in the period 1 July 2020 to 24 September 2020.
Amounts released under this arrangement will be tax free. Also, the amount does not count as income and is not taken into account under any income or means test.
The application process is via your “MyGov” account. This is the case for members of retail funds and SMSFs.
For those members of SMSFs wishing to apply, the trustees of the fund is required to wait for an ATO approval letter before payment of any funds to members. Trustees are also required to complete documentation. Our office is happy to assist you in the preparation of these documents.
Super Guarantee Amnesty
The ATO deadline for the SG amnesty is 7 September 2020.
Employers who have not met their SG obligations have until this date to disclose, lodge and pay any unpaid SG amounts for their employees for any quarter between 1 July 1992 and 31 march 2018. If they do so, employers can claim deductions for the payments made during the amnesty, and not incur administration charges or penalties.