Many SMSFs own a business real property, in which the tenant is often a related party to the SMSF. As a result of the economic impact of the COVID-19 pandemic and government restrictions imposed causing the widespread and substantial revenue reduction for many Australian businesses, many tenants are seeking rental relief from the landlords. The following documents are now available for download in the NowInfinity Help Center to assist with this cause:
- Request Letter – From the tenant to the fund seeking the relief
- Trustee Resolution - Approving the rental relief
- Confirmation Letter – From the trustee of the Fund to the tenant agreeing with the relief
You can download the template COVID-19_Rental Relief Template.docx. "by downloading this template you agree and understand the Disclaimer below".
- Any information expressed in the documents does not purport to be any financial, tax or legal advice as we have not taken into account any of your or your client’s financial or tax objectives that are specific to you or your client’s circumstances.
- While effort has been taken to make sure the information is as accurate and relevant as possible, it is at best construed as general information only. These documents may not be suitable for all lease situations.
- You should not rely on the information provided as advice, instead seek your own independent advice from appropriately qualified practitioners or conduct your own research.
- As some of the merge fields are currently not available on NowInfinity, only refer to the above template as a reference and manually update the highlighted merge fields where necessary.
My SMSF owns real property and wants to give my tenant – who is a related party – a reduction in rent because of the financial effects of COVID-19. Charging a related party a price that is less than market value is usually a contravention. Given the effects of COVID-19, will the ATO take action if I do this?
Some landlords are giving their tenants rent relief as a rent reduction, waiver or deferral because of the financial effects of COVID-19 and the ATO understands you may wish to do so as well. ATO's compliance approach for the 2019–20 and 2020–21 financial years is that they will not take action if an SMSF gives a tenant – even one who is also a related party – a temporary rent reduction, waiver or deferral during this period.
If your SMSF holds an interest in an interposed entity such as a non-geared company or unit trust and that interposed entity leases property to a tenant, the ATO will not treat the investment in the interposed entity as an in-house asset for the current and future financial years as a result of a deferral of rent being provided to the tenant due to the financial effects of COVID-19.
If there are temporary changes to the terms of the lease agreement in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change. You can do this with a minute or a renewed lease agreement or other contemporaneous documents.