Some of our clients own commercial properties by either their self-managed super fund (SMSF) or a Unit Trust. With tenants requesting rental adjustments due to COVID-19, an issue will arise if the tenant is a related party. Auditors need to ensure the fund complies with Section 65 and 109 of SISA and also the biggest issue being the Sole Purpose Test.

Therefore, as a trustee you will need to ensure you comply with the auditors requirements which are:

1. A letter from the tenant to the landlord (SMSF or Unit Trust ) asking for rent deferral and the reasons why. The landlord must be satisfied that the business was affected due to COVID-19 and the tenant is seeking rent deferral or assistance. If the tenant is eligible for JobKeeper due to a reduction in revenue, this will be a “good” indication in this instance.

2. The landlord’s reply to the tenant should clearly include the following:

The amount of discount or deferral they have approved. This approach is given to the tenant for immediate cashflow assistance.
The term of the deferral.
The date the deferral finishes and the lease goes back to pre-COVID-19 rent.
Whether there is an option to extend the deferral period if business does not pick up once the deferral term finishes.
If the tenant is seeking a few months (up to six months) rent holiday, the landlord may extend the lease term for the equivalent period.

Further help:

If you need tailored advice for your SMSF, our superannuation experts give hands on help to keep your fund compliant. Contact us on (07) 3023 4800 or at mail@marshpartners.com.au to organise a chat about your retirement goals.

You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better. We’ll help you set goals for your business, devise an Action Plan to make them happen and meet with you regularly to ensure you stay on track.

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