However, it also said the SMSF independent auditor’s report should nevertheless still be modified for material contraventions in accordance with the auditing standards.

“If you are not satisfied the relief offered by the trustee is on commercial terms or it has been offered due to the adverse financial impacts of COVID-19, you should report the contravention and explain in the ACR why you think there is a breach,” the ATO said.

“If we subsequently find the relief was genuinely provided as a result of COVID-19, then we won’t take compliance action against the fund.”

The ATO also said auditors can use their professional judgement to form an opinion on the commerciality of the arrangement provided:

• the relief looks reasonable
• the trustee is able to show evidence the relief was documented and offered as a result of the adverse financial impacts of COVID-19

The ATO also acknowledged that while auditors should be able to establish whether the rental or loan repayment relief is on commercial terms, other contraventions of the super laws may still arise.

For example, it said where the rental relief is offered to a related party, contraventions of the following super laws may also arise:

• the sole purpose test and providing financial assistance to a member of the fund (as per SMSFR 2008/1)
• the in-house asset provisions as a rental deferral can amount to a loan

Further, the ATO said if the fund holds a property via an interposed company or unit trust, the relief may trigger the events in regulation 13.22D, thereby causing the fund’s investment in the interposed entity to become an in-house asset.

In all those cases of contravention, the ATO said its current approach is that it will not take compliance action, which includes not imposing penalties or disqualifying trustees for these types of breaches.