SMSF members can give rental relief

The Australian Taxation Office (ATO) will not consider it a contravention if self-managed superannuation fund (SMSF) members with real property reduce the rental price for tenants due to the financial impacts of COVID-19. 

The ATO said it would not take action if SMSF landlords wished to do so despite charging a related party a price that was less than market value. 

“Some landlords are giving their tenants a reduction in or waiver of rent because of the financial impacts of the COVID-19 and we understand that you may wish to do so as well,” the ATO said. 

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“Our compliance approach for the 2019-20 and 2020-21 financial years is that we will not take action where an SMSF gives a tenant – who is also a related party – a temporary rent reduction during this period.” 

SuperConcepts welcomed the approach and said it had many concerned SMSF clients who owned a business premise that was being leased to a small business. 

SuperConcepts general manager of technical education services, Peter Burgess, said: “The impacts of COVID-19 have hit small business particularly hard to the point where the related party can no longer afford to pay their rent.  

“Whereas other small business owners are getting a form of rent relief from landlords, for an SMSF to charge a related party any rental price that is less than market value is usually a contravention that would incur penalties.” 

Burgess noted one of the benefits of an SMSF was the ability for small business owners to lease a business premise owned by their SMSF but it came with the strict requirement to ensure all lease payments are on commercial arm’s length terms. 

“SuperConcepts fully supports this relief measure which provides certainty and much needed relief for a growing number of SMSFs that own a business premise, and have been caught in the economic turmoil caused by the COVID-19,” he said. 

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