SMSF trustees who have continued to provide tenants with rent deferral relief due to the impact of COVID-19 have been encouraged by the ATO to give feedback on plans to extend those relief measures.
In an update on its website, the regulator said SMSF trustees and financial advisers could provide feedback on a draft legislative instrument that would extend rental deferral relief offered for the 2020 and 2021 income years to cover the 2022 income year.
It stated the extension may be necessary for some SMSFs offering relief so as to avoid contraventions of the in-house asset provisions of the superannuation laws.
A contravention could occur where a rental deferral provided by the fund to a related-party tenant was considered a loan to the related party, which would ordinarily be an in-house asset of the fund.
Additionally, the in-house asset provisions could be breached where a fund had an investment in a related non-geared company or unit trust that is exempt from being an in-house asset under super laws, and the related party provides a rental deferral to a tenant, which causes the exemption to cease and the investment to become an in-house asset.
The ATO noted relief that applies to the 2020 and 2021 income years can be found in the Self-Managed Superannuation Funds (COVID-19 Rental income deferrals – In-house Asset Exclusion) Determination 2020, which was made by way of legislative instrument, and the relevant asset would not be considered an in-house asset for the 2020 and/or 2021 income years, or any future income years.
It added that it had already advised SMSF trustees and auditors of the extension and its plans to make a similar determination by way of a legislative instrument for the 2022 income year, and that was now available on its website for consultation until 17 December.
SMSF trustees and advisers can consult the draft legislation on the ATO’s website via the consultation hub, which also provides access to an explanatory statement.
In addition, the regulator announced during the interim it planned to adopt compliance approaches that have been outlined in the addendum to the auditory/actuary contravention report instructions.