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We could all use a little relief, but it's a little (lot) more complicated this time around.
UPDATE 07/02/22
It was announced on 15 January 2022 that this scheme would be extended, but it has taken until now for the legislation to drop.
THE SHORT OF IT?
Businesses (tenants) that have experienced a drop in turnover of at least 30 percent or more because of COVID-19 during January 2022 when compared with January 2020 may be eligible for the equivalent drop in rent for the period 16 January 2022 to 15 March 2022.
Businesses who were eligible for the previous scheme are not automatically eligible for the extension.
THE LONG OF IT?
The Victorian Government introduced the Commercial Tenancy Relief Scheme (the scheme) to ease the financial hardship commercial tenants and landlords faced due to the coronavirus (COVID-19) pandemic.
The original scheme introduced in 2020 was reintroduced on 28 July 2021 and now has been extended until 15 March 2022 (a further two months).
At a high level, if tenants have experienced a drop in turnover of at least 30 percent or more because of COVID-19, January 2022 when compared with January 2020, commercial landlords are required to give their tenant rent relief that:
- is in proportion to their tenant's fall in turnover because of coronavirus, if down at least 30%
- is made up of a minimum 50 per cent rent waiver (the remainder can be made up of a rent deferral)
New alternate tests for comparing turnover are available, including for new businesses or those impacted by events such as bushfires during January 2020.
Unlike the previous scheme, the extension is retrospective from 16 January 2022. A tenant can make a request for rent relief back to that date, as long as they submit their application to their landlord and provide the necessary evidence on or before 15 March 2022. In saying this, we do recommend making the required as soon as possible.
The scheme is effective from 28 July 2021 and will run until 15 March 2022. There is also a freeze on rent increases until that date.
As part of the process, tenants are required to provide certain information to your landlord. This can include:
- extract of your financials
- business activity statements
- bank statements
- statement prepared by a practising accountant (that's us)
WHAT DO YOU NEED TO DO?
You will be required to make a request in writing to your landlord, including the following:
- that you are an eligible tenant
- that you satisfy the turnover test including alternate test if applicable
- the reduction in rent requested
- any other circumstances that you would like the landlord to consider
The Victorian Small Business Commission has provided templated letters for making your requests for relief under FAQ 1 here
We can assist in reviewing the relevant period, in providing a statement of evidence (by a practising accountant) and in preparing your letter to the landlord. Should you require our assistance, please complete our typeform.
CLICK HERE FOR OUR TYPEFORM
LANDLORDS
If you are a landlord and have assisted or wish to assist your tenants with rent relief, please reach out. You may be eligible for a 25% reduction in land tax as well as some further assistance under the Commercial Landlord Hardship Fund, which has been extended to 22 March 2022.
THE SCHEME (EXTENSION)
For full details of the extension of the Commercial Tenancy Relief Scheme Regulations 2022, CLICK HERE or jump onto the Victorian Small Business Commission website HERE
