We understand that during the extreme business and economic conditions related to COVID-19, many businesses have already stopped paying for their SMSF owner lease under their current lease in order to ensure their survival in their business. This announcement regarding the ATOs approach to facilitate SMSF leasing is welcomed and offers some minor but potentially important facilities for SMSF agents who have a lease agreement with a company or related parties. 1. Rental agreement – prepared by a lawyer2. a competing transaction – the SMSF cannot grant “special treatment” to a close party3. Market rent – the lease allows you to reset the market rent according to your needs4. Due date – reasonable rental dates5. Restoration – The SMSF must take appropriate measures to remedy infringements6. Proof: sufficient evidence and paper trace for the auditor smsf and ATO. This confirms that no benefit is granted to the member who rents the commercial property7.
legal – does it correspond to retail and commercial rental legislation across Australia and Superannuation Laws If an SMSF and its tenant have agreed to reduce rent, how should SMSF properly implement and document rent facilitation? Jonathan See of Townsends Lawyers examines the following scenario: Ed, Rose and Ted are members of the 90 Day Finance Superannuation Fund (“Fund”). TLC Pty Ltd (“Trustee”) is the trustee of the Fund, with ed, Rose and Ted as directors. The fund owns a commercial store that it rents to Ted, who runs a small clothing store. Ted pays a weekly rent of $1000.00 to the fund. Due to COVID-19, Ted had to close the store by the government until further notice. In order to support lease parties in these situations, the NSW Government has adopted the Retail and Other Commercial Leases (COVID-19) Regulation 2020 [NSW] (“Regulation”) which required parties to a commercial lease to renegotiate the lease, provided that the parties did so in good faith and complied with the requirements. Unable to meet his rental obligations, Ted requested an 80% rent reduction per week or a weekly rent of $200.00 for 6 months or until the end of COVID-19 and the repayment of rent arrears after the rental charge expired. In support of his application, he submitted the following: (a) tax returns and activity reports (“BAS”) to demonstrate that his company had a turnover of $1 million in the 2018/2019 fiscal year; and (b) documents and calculations showing that its turnover is down by 80%. The agent (of which Ted is of course the director) reviewed the application and supporting documents and accepted the request when he was satisfied. Now that the agent and Ted have agreed to facilitate rents, what steps should be taken to implement rent facilitation? Since Ted is a tenant of a close party, the agent and Ted must agree that they treat each other at different lengths.
In order to determine whether they are dealing with each other under temporary business conditions, the question arises: would the fund, as the owner, offer Ted the same conditions if he were not a close party? If the answer is yes, the parties act at another time. Otherwise, the fund will have compliance issues, the agent should then check the Fund`s trust inedicacy to ensure that the deed does not indicate anything that could prevent rent relief by the agent. . . .