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The ATO has issued a formal Legislative Instrument that covers in-house asset issues where a self-managed superannuation fund (SMSF) provides rent relief to a related party (Self Managed Superannuation Funds (COVID 19 Rental income deferrals – In house Asset Exclusion) Determination 2020 – Self Managed Superannuation Funds (COVID-19 Rental income deferrals – In-house Asset Exclusion) Determination 2020 (legislation.gov.au)).
The determination provides that rent deferred during the 2019-20 and 2020-21 financial years by an SMSF, or a company or unit trust in which an SMSF holds an interest, is not an in-house asset where the related party tenant is financially affected by COVID-19.
The determination applies for the year in which the deferral was made and any future income years.
Without the determination, the rent deferred could be an in-house asset of the SMSF and result in compliance issues if the value of all in-house assets of that SMSF exceeded 5% of the assets of the SMSF.
It is still important for SMSFs to ensure that any rent relief provided to related parties is on normal arm’s length terms, and properly documented. This is discussed further in our earlier publications, including What SMSFs must do to keep their auditors happy when they have provided COVID-19 relief to related parties and ATO confirms auditors must review and report on SMSFs providing COVID-19 rent relief to related parties.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.
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Cooper Grace Ward acknowledges and pays respect to the past, present and future Traditional Custodians and Elders of this nation and the continuation of cultural, spiritual and educational practices of Aboriginal and Torres Strait Islander peoples.
Fast, accurate and flexible entities including companies, self-managed superannuation funds and trusts.