Renting property from your own SMSF? Recent changes in response to Coronavirus

In response to drastically changed trading condition for many business, the ATO recently announced that where an SMSF was renting property to a related tenant, rental concessions can be considered. These concessions can be either a reduction in rent for a period of time or a deferral of current rents until cash-flows for the tenant improve.

This response is good news for business that have had their trading activities and revenue impacted by recent circumstances.

If your business leases property (commercial or primary production) from your SMSF and your business in suffering as a result of Covoid19, please contact Daniel Uden to discuss.

The following example has been provided by the ATO in response to a temporary reduction or deferral of rent.

Question: My SMSF owns real property and wants to give my tenant – who is a related party – a reduction in rent because of the financial impacts of the COVID-19. Charging a related party a price that is less than market value is usually a contravention. Given the impacts of the COVID-19, will the ATO take action if I do this?

ATO Answer: 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. 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.