Rent relief to go beyond 2020

rent relief

The COVID-19 rent relief instrument may need to be extended beyond 2020 in keeping with the timeframe applied to other measures, an SMSF auditor has said.

Any rent relief arrangements SMSF landlords have made in relation to the COVID-19 economic measures are likely to have to extend beyond 2020, a specialist auditor has predicted.

The Leasing Code of Conduct stipulates any rent relief measures are to run for the same length of time that the federal government’s JobKeeper initiative is to run, with both actions set to expire on 20 December.

“We’re going to need to look at how that’s going to work after 20 December because certainly we’re not going to see a return to business activity by then that is going to get us back to normal,” ASF head of technical Shelley Banton said during the latest SMSF Association COVID-19-related webinar.

“Obviously super funds and also their tenants are going to have cash-flow issues [beyond that date] so we’re going to be seeing delays and deferments in rental payments extend beyond that date.”

Further, Banton highlighted a similar issue SMSF landlords might face if they are having to service a limited recourse borrowing arrangement (LRBA).

“One of the problems I think too will be while that deferral of loan repayment- and there is no loan repayment waiver that’s been provided under the LRBA, it’s just a deferral of the repayments- has to be repaid within 24 months,” she noted.

“We’re [potentially] going to be in a situation whereby super funds with an LRBA aren’t going to necessarily be back on track within that time frame and banks may start to call in those monies to be able to get over the predicament they’re in.”

This may lead to more compliance issues for SMSFs as they may be forced to refinance the borrowing with a subsequent loan that may not conform to strict commercial terms, she said.

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