by Alex Polorotoff

Following the recent Government announcements regarding relief for tenants of rental properties, the ATO has clarified their guidance on how this impacts SMSFs.

Briefly, they have indicated they will allow SMSFs to provide temporary relief of existing rental agreements for tenants, if it is due to the recent COVID-19 pandemic and the adjustment(s) are on an arm’s length basis.  

Whilst this would be straight-forward for unrelated party agreements, for related-party arrangements it might not be so clear.  Rent relief in these circumstances might result in lower rental payments, a deferral of rental payments or a waiver of rental payments for a period of time.  

Regardless, if the terms of the lease are amended, the following should be documented:

• The Tenant should formally write to the Trustee for relief on the rental terms
• The Trustee should then write to the Tenant what the reduced terms are.  They should also document why the amended terms have been agreed to.  This might be documented in a minute
• A lease variation document should be drawn up.