Speaking to SMSF Adviser, SMSF Association chief executive John Maroney noted the ATO’s guidance, stating that it will not take action for the 2019–20 and 2020–21 financial years where an SMSF gives a tenant — who is also a related party — a temporary rent reduction or waiver during this period.

As a result, Mr Maroney said he expects the ATO to release guidance which is also applicable for loans “in the coming days”.

“This means SMSFs will be able to provide rental and loan relief in line with the current markets. We support this is a positive and pragmatic approach taken by the ATO during this time when many SMSFs are experiencing financial hardship,” he said.

“Where there are temporary changes to the terms of the lease agreement or loan agreements in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change.”

Following the government’s announcement, mortgage brokers and landlords have noted their concerns to SMSF Adviser about whether loan relief can be provided in response to rent relief being given to tenants.

One mortgage broker said SMSFs with a mortgage on a commercial property will not have a loan deferment option available to them.

“This could very seriously hamper the ability of a landlord to offer a tenant rent relief,” the broker said.

In addition, a landlord with a limited recourse borrowing arrangement (LRBA) with a related party but with arm’s-length tenants also asked if there would be a provision to reduce loan payments.

They also showed concerns around whether they are meant to accurately verify their tenant’s trading reduction.

“Given we have small sole trader tenancies that will be eligible for the JobKeeper, what incentive is there for them to keep trading? [It] looks like a paid holiday at our expense, not to mention the NSW $10,000 grant,” the landlord said.

“We have already had one tenant voluntarily put their business on hold, so that is a 100 per cent reduction. The government has seriously got this one wrong.”