SMSF Legislative Bulletin – July 2020
Written and accurate as at: Jul 17, 2020 Current Stats & Facts
The last few months have seen several rule changes which will impact your superannuation in future financial years. Outlined below is a summary of the key legislative changes made for 2021, and how they will impact you and your fund.
50% reduction in minimum drawdown for account-based pensions
In response to lower asset prices during the COVID-19 selloff in March 2020, the Federal Government provided a reprieve to retirees by reducing the minimum drawdown by 50% for financial years 2020 and 2021.
The reduced amounts are as follows
| Age | Standard minimum % withdrawal | Reduced rates for FY20 and FY21 |
| Under 65 | 4% | 2% |
| 65-74 | 5% | 2.5% |
| 75-79 | 6% | 3% |
| 80-84 | 7% | 3.5% |
| 85-89 | 9% | 4.5% |
| 90-94 | 11% | 5.5% |
| 95 or more | 14% | 7% |
FY2021 related-party limited recourse borrowing arrangement rates
If you are using limited recourse borrowing arrangements between your SMSF and a related party, the ATO has set the preferred loan pricing. Feel free to use a lower rate if you can justify it as comparable to an arm’s length lender such as a banking institution.
| Financial Year | Real Property | Listed Shares/Units |
| 2020/21 | 5.1% | 7.1% |
Changes to the work test
On 28 May 2020, the Federal Government updated regulations via Superannuation Legislation Amendment (2020 Measures No. 1) Regulations 2020 to increase the maximum age for voluntary contributions without meeting the work test. Before 1 July 2020, an individual over the age of 65 would have to meet the work test before making a voluntary superannuation contribution. The work test involves working 40 hours in a 30-day consecutive period during the financial year. Voluntary super contributions include salary sacrifice, personal deductible and non-deductable contributions, and spouse contributions.
From 1 July 2020, individuals who are under age 67 can make personal contributions to superannuation. If you are considering any voluntary contribution after age 67, you must meet the work test before contributing.
For balances below $300,000, there is a new work test exemption which allows individuals to make a once-off voluntary contribution for the financial year following retirement, up to 28 days after your 75th birthday.
It is worth noting that the extension does not apply to the bring-forward rule for non-concessional contributions which is expected to pass through parliament in the coming months.
Director Identification Number (DIN) regime
The new DIN legislation was passed by parliament via the Treasury Laws Amendment (registries modernisation and other measures) Bill 2019 in June to deter and detect corporate phoenix activity. A DIN will improve transparency and traceability of the director’s various company relationships by tracking directors of failed companies and the use of false identities.
The unintended consequence of the legislation is that directors of an SMSF corporate trustee will be required to register and obtain their DIN by 12 June 2022 (or earlier if set by the appointed regulatory body). This will also impact the process for appointments of new directors to SMSF’s whereby there will be a 28-day reporting period to the regulator.
Where to from here?
We await the next sitting of parliament in late July for the outcomes of the bring-forward rules. No doubt the superannuation system will continue to change in the coming year as the government reacts to the current economic times. As always, in an ever more complex environment, be sure to seek advice from a qualified professional concerning your superannuation matters.