COVID-19 rent relief extended for SMSF landlords and commercial tenants to FY22 if documented properly

Legislation in NSW and Victoria extends the rent relief offered by landlords to its commercial tenants to January 2022.

In relation to SMSFs - the ATO has also recently announced that it has extended the relief offered to SMSFs to 30 June 2022 where the SMSF offers COVID-19 rent relief to a related party.

This article will outline the extension of existing relief and what it means for SMSF landlords and for commercial tenants.

COVID-19 relief for SMSF landlords

If an SMSF has entered into a commercial lease with a related party, and the tenant is experiencing hardship with its repayments as a result of COVID-19, then the SMSF landlord may grant the tenant COVID-19 relief from repayments. The relief has now been extended up to 30 June 2022.

Ordinarily, agreeing rent other than on arm's length terms to a related party tenant would breach super law - however, for the purposes of COVID-19 relief, it does not. The Australian Taxation Office has acknowledged that an SMSF would be permitted to accept temporary relief in relation to an existing LRBA between the SMSF and a related party due to the financial effects of COVID-19. In order for such arrangement to comply with super law it must be on commercial terms and be documented properly. The Cleardocs Rent Relief (COVID-19) product can assist you with this.

The Cleardocs' Rent Relief (COVID-19) product provides an SMSF with the required documentation which the SMSF will need in order to continue to comply with super law, if the SMSF intends to provide COVID-19 rent relief to a related party commercial tenant. The product can be accessed here.

The 'rent relief' offered by the product includes:

• deferral or a partial waiver of outgoings;
• deferral, partial waiver or full waiver of rental payments; and/or
• an extension of the lease term if a deferral of rent is being provided.

COVID-19 relief for commercial tenants

Our earlier article discusses the rent relief in relation to commercial tenants.

The National Cabinet Mandatory Code of Conduct - SME Commercial Leasing Principles during Covid-19 (Code) introduced rent relief for commercial tenants who qualified under the relief scheme. Legislation has been enacted in each State and Territory which implements the provisions of the Code in that State and Territory. While that legislation substantially mirrors the principles in the Code, there are differences in the legislation enacted by each State and Territory, and it is the specific provisions of the legislation in each State or Territory which will apply.

Due to the continuing impact of COVID-19 in Australia, New South Wales and Victoria extended the coverage of the relief to the following dates:

• Victoria: 15 January 2022
• NSW: 13 January 2022

The Cleardocs' Rent Relief (COVID-19) product provides a tenant and a landlord with the required documentation they need in order to properly document the relief. The product can be accessed here.

The 'rent relief' offered by the product includes:

• deferral or a partial waiver of outgoings;
• deferral, partial waiver or full waiver of rental payments; and/or
• an extension of the lease term if a deferral of rent is being provided.

This product can be used to retrospectively document an existing arrangement between a tenant and landlord.

More information

For more information, please contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Property team for commercial tenancies and the Markets & Revenue team for SMSF landlords.

More Cleardocs information on related topics

You can read earlier ClearLaw Articles on a range of topics, including the following topics which you may find relevant:

• Leasing during lockdown - land tax and payroll tax relief during COVID-19
• Can you request a COVID-19 early release of super from a TRIS?
• Your SMSF investment strategy and COVID-19

Order related document packages

• Rent Relief (COVID-19)
• SMSF Minutes and Resolutions Package
• SMSF Pension Commutation
• SMSF Pension Pack
• Superannuation Trust (SMSF)
• Update to SMSF