The ATO has clarified the situation where an SMSF owns real property and has been requested by a related party tenant for a temporary waiver or reduction in rent because of the financial impacts of COVID-19.
Charging a related party a price that is less than market value is usually a contravention.
Given the financial impact of COVID-19, will the ATO take compliance action if this occurs?
Where landlords are giving their tenants a rent reduction or waiver because of the financial impacts of the COVID-19, the ATO’s compliance approach for the 2019–20 and 2020–21 financial years is that they will not take action where an SMSF gives a tenant – who is also a related party – a temporary rent reduction or waiver during this period.
Where 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.
SMSF Auditors will require a signed minute or a renewed lease agreement for the 2020 audit.
Read the ATO’s FAQ on COVID-19 for SMSFs