Mandatory reassessment of rent relief – impact on small business tenants who don’t comply
It’s important for Victorian tenants who have a rent relief agreement with their landlord under the Commercial Tenancy Relief Scheme (the Scheme) to complete the mandatory reassessment.
Under the Scheme, tenants are required to re-assess their turnover for the quarter ending 30 September 2021. This mandatory reassessment must be given to their landlord by 31 October 2021.
If a tenant does not provide the required evidence to their landlord for the mandatory reassessment by 31 October 2021, the waiver component of their rent relief agreement will no longer apply from that date onwards. The non-waiver component (e.g. deferral) will, however, still apply.
The purpose of the reassessment is so the landlord and tenant can check in with each other and find out if circumstances have changed and the rent relief needs to be adjusted.
It only applies for rent relief requests made on or before 30 September 2021 and for tenants who started trading before 1 April 2021.
The fall in turnover for the reassessment period is calculated by comparing the turnover in the two periods in this table, depending on when the business started. Rent relief might either increase or decrease as a result.
The minimum rent relief provided must be the same as the fall in turnover, with at least half waived and the remainder deferred.
Tenants completing a reassessment must provide the following to their landlord in writing by 31 October 2021:
- The test turnover
- The comparison turnover
- The change in turnover
- A statutory declaration made by the tenant or an authorised officer of the tenant stating that the tenant is an eligible tenant and that the information provided by the tenant is true to the best of the tenant’s knowledge and belief
To show a fall in turnover, tenants will need to provide at least one of the following forms of evidence to their landlord:
- Extracts from the tenant’s accounting records or
- The tenant’s BASs that relate to the relevant turnover test period (providing the G1 information – total sales and remembering to not disclose their tax file number) or
- Statements issued by an authorised deposit-taking institution (e.g. a bank) that relate to the tenant’s account or
- A statement prepared by an independent practising accountant
If a tax agent or BAS agent lodges your BAS with the ATO, it’s unlikely that they will be able to provide you with your September 2021 BAS as lodgement is required by 25 November. In this situation, you should look to provide at least one of the other forms of evidence.
It’s important that tenants read the regulations for the Scheme carefully, particularly regulation 29 – Mandatory reassessment of rent relief agreement (pages 33–35).
A tenant can make another request for rent relief where they already have an agreement under the Scheme in place and their financial circumstances have materially changed. This might allow tenants that miss the mandatory reassessment date to make another request for rent relief.