The ATO have accepted that self-managed superannuation funds (SMSFs) can provide rent relief and loan concessions to related parties because of COVID-19 without breaching the SIS Act, but there are limits - see other publications.

The ATO have made it clear to auditors that they must obtain particular evidence from SMSFs where relief has been provided, or else the auditor may have to qualify audit reports or report contraventions.

So, what do SMSFs have to provide their auditors?

Rent relief

Where an SMSF has provided rent relief to a related party, it must satisfy the auditor of the following.

  • The rent relief must be on commercial terms, following either the National Cabinet Mandatory Code of Conduct , or otherwise substantiated with evidence about what other landlords are doing in the same circumstances. If the rent relief is not consistent with the Code, then the SMSF must provide the auditor with documents supporting the same kind of relief from arms-length landlords in the same situation.
  • The rent relief must be as a result of COVID-19, so the SMSF must provide documentation of how the tenant has been affected.
  • The rent relief must be documented, so SMSFs must have a contemporaneous document that amends the lease, and the parties must then comply with the new terms.

The same issues apply where rent relief is provided by an entity in which the SMSF has invested, rather than the SMSF itself.

Loan concessions

Similarly, where an SMSF has provided loan concessions to a related party, it must satisfy the auditor of the following.

  • The concessions must be consistent with what the banks are providing. The ABA outlines what commercial lenders are doing, and an auditor can accept loan concessions as appropriate if consistent with this. Generally, interest should continue and be capitalised to the loan.
  • The loan concessions must be as a result of COVID-19, so the SMSF must provide documentation of how it has been affected.
  • The loan concessions must be documented, preferably as a formal variation to the loan terms.

Other things the auditor may require

There is a range of other information SMSFs are likely to be required to provide to their auditors.

  • Where the SMSF finds it difficult to obtain evidence to support values of assets due to COVID-19, then it must supply the auditor with evidence of this. Auditors are required to explain in their contravention report why there is insufficient evidence of value, and, if it is due to the impact of COVID-19, the ATO will take no action.
  • Auditors must be checking that any early release due to COVID-19 satisfies the eligibility criteria. This means SMSFs must:
    • supply their auditor with the ATO determination allowing the release (which the SMSF must have received before the release occurred)
    • ensure the release was made in only one lump sum payment equal to the amount in the ATO determination
    • ensure their trust deed allows the release.


Auditors will be requiring additional evidence where SMSFs have taken action due to COVID-19, so SMSFs must be prepared with their substantiation and documentation, or risk qualified audits or contraventions being reported.

© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

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 contact Cooper Grace Ward Lawyers.