Regardless of who undertakes the valuation, it is required to be based on:
– Objective and supportable data,
– Be capable of explanation to a third party and
– Should include the valuation method used.

Our auditors have confirmed that any valuation which does not clearly evidence the method applied including the inputs will not be sufficient. For example, a real estate appraisal based on comparable sales that does not list out the comparable sales is unlikely to comply with the ATO guidance or be sufficient audit evidence.

Valuation/Appraisal Requirements:

Residential Property

Examples of additional support for residential property include comparable sales (4 or more) in the period April-June 2020 or a suburb trend report. However, any suburb trend report must clearly evidence sales activity has occurred within the quarter to 30 June 2020.

Commercial Property

Examples of additional support for a commercial property outside of comparable sales may include:

• Consideration of the industry associated with the commercial property and whether it has been impacted by COVID-19 (i.e. retail likely to be impact whereas warehouse storage not likely to be)
• Consideration of the location of the commercial property and whether it has been subject to restrictions such as trading or travel restrictions.
• Rental yields for an unrelated tenant
• The nature of the tenancy – reputable company v small business not yet established
• Any impact on the tenant’s business – tenant in rent arrears or rent relief offered.

Signed trustee minutes touching on the above points to support a real estate agents’ appraisal will likely be required this year.

If you have any questions or queries, please don’t hesitate to contact us. We have a few local real estate contacts who can assist with obtaining appraisals if you don’t already have a relationship with an agent and can pass on your details is requested.

The post COVID-19 and SMSF Property Valuations appeared first on BISSuper Website.

Making the decision to access your superannuation early is a significant one and if possible, should be encompassed by financial advice.

The Australian Taxation Office have now released guidance on the process for accessing superannuation early from SMSFs to assist in cushioning the adverse economic effects of Coronavirus.

How much can you take out?

You will be able to apply online through the myGov website (https://my.gov.au/) to access up to $10,000 of your superannuation before 1 July 2020.

You can access a further $10,000 of your super from 1 July 2020 until 24 September 2020.

You will only be able to make one request for each financial year. For example, should you nominate for a lesser withdrawal amount in 2019/20, you will not be able to apply again before 1 July 2020 for the remainder nor will you be able to apply for more than $10,000 from 1 July 2020.

If you access your superannuation you will not be required to pay tax on amounts released and any amounts withdrawn will not affect your Centrelink or Veterans’ Affairs payments. These amounts will also not be included in your assessable income for the financial year the withdrawal is made.

Satisfying early release requirements

The intention of the legislation is that you are adversely affected by the economic impacts of COVID-19 and require early access to your superannuation which is ordinarily preserved until your retirement.

To apply for early release of your superannuation, you must satisfy one or more of the following requirements:

• You are unemployed.
• You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
• On or after 1 January 2020, any of the following happened:
  • You were made redundant.
  • Your working hours were reduced by 20% or more.
  • You were a sole trader and your business was suspended or your turnover decreased by 20% or more.

These are the only requirements that must be considered.

How to apply to access your superannuation

From today, those affected can register their interest to access through the myGov website (https://my.gov.au/).

If you satisfy one or more of the requirements entitling you to access your superannuation early, you will be able to do so from mid-April.

After applying through myGov, the ATO will issue you with a determination advising of your eligibility to release an amount. Only once your SMSF receives the determination from you, will the trustee be authorised to make the payment. If you apply to access superannuation benefits from a non SMSF, the determination will be issued by the ATO direct to the APRA regulated funds and the trustee will proceed to release your benefits to a nominated bank account.

Other ways to access superannuation

You may be allowed to withdraw some of your super due to other reasonings, such as:

• Access on compassionate grounds
• Access due to severe financial hardship
• Access due to a terminal medical condition
• Access due to temporary incapacity
• Access due to permanent incapacity
• Your super balance is less than $200

I would recommend getting in touch with me to discuss your specific circumstances in more detail to ensure you aren’t breaching any regulations.

How can we help?

If you need assistance with the early access of your superannuation or whether this is the right action for you and your specific circumstances, please feel free to give me a call so that we can discuss in more detail.

The post COVID-19 – Accessing your superannuation early appeared first on BISSuper Website.

If your SMSF has a property and a tenant in financial distress, you may be able to provide your tenant with rental relief under an agreed commercial arrangement. This may even be the case when the tenant is a related party or yourself.

Ordinarily, charging a tenant a price that is less than market value in an SMSF is usually a breach of superannuation laws. However, the ATO have provided guidance which allows SMSF landlords to provide for a reduction in or waiver of rent because of the financial impacts of the COVID-19.

For the 2019–20 and 2020–21 financial years, the ATO will not take action where an SMSF gives a tenant – who may also be a related party – a temporary rent reduction during this period.

What do you need to do?

There are some important things you should ensure are in place when you are providing a rent reduction to a tenant, especially when this is a related party.

• Ensure the relief only applies to rent.
  • Any relief offered to a tenant can only relate to the rent component of the lease agreement. The ATO concession does not extend to other lease incentives.
• Ensure that the reduction in rent is only temporary.
  • This means it should have an agreed period of time or agreed date where the rent is reviewed in light of the economic circumstances.
• The financial difficulty faced by the tenant is linked to the financial impacts of COVID-19.
  • Any negotiated rent relief will need to be measured against the COVID-19 financial impact suffered by your tenant.
• Clear arrangements which detail the amount of discount, waiver or deferral of the rent.
  • In evidencing that the rent relief is reasonable, it would be best practice if it is consistent with an approach taken by an arm’s length landlord.
• Ensure you have proper documentation which allows your independent auditor to be satisfied that the temporary rent relief satisfies all of the above.
  • This may take the form of a signed minute, renewed lease agreement or anything deemed appropriate to amend the terms of the lease temporarily.
  • Even if you are both the tenant and landlord, the above should all be documented.

These are extraordinary times and the ATO is providing this guidance to allow SMSF trustees to be flexible and agile.

If trustees act in good faith in implementing a reasonable and measured reduction in rent because of the impacts of COVID-19 they should not fall foul of the law.

How can we help?

If you need assistance providing rental relief or whether this is the right action for you and your specific circumstances, please feel free to give me a call so that we can discuss in more detail.

The post COVID-19 – Providing rental relief for the tenant in my SMSF property appeared first on BISSuper Website.