Commercial Tenancy Relief 2022 Extension
To support small business tenants under financial pressure as the state continues to respond to the COVID-19 Omicron variant, the Victorian Government has extended the Commercial Tenancy Relief Scheme (the Scheme) until 15 March 2022.
To be eligible, the tenant’s business must be a small entity with an annual aggregate turnover under $10m that has had a minimum 30 per cent reduction in turnover due to COVID-19.
The Scheme is effective retrospectively from 16 January 2022 to 15 March 2022.
<Eligible tenants>
In most cases, an eligible tenant:
is a small entity that, as at 16 January 2022, operated a business in Australia and
satisfies the decline in turnover test as set out at regulation 13 of the Scheme and
is not an ’excluded’ tenant or certain prescribed class of tenant.
A small entity is defined in regulation 11 as an entity with an annual turnover of less than $10m at the group level during the 2021 financial year or, if having not traded for the full duration of the 2021 financial year, its turnover for the 2022 financial year is likely to be less than $10m.
<Re-application – previous agreement holders>
Unless the landlord and tenant have agreed to continue a rent relief agreement that’s already in place, the tenant will need to make another request to their landlord for relief after 15 January 2022.
<New application>
A tenant can request rent relief from their landlord under the extended Scheme without having previously made a request. They first need to check that they meet the eligibility criteria and then follow the steps for requesting rent relief.
<How to make the request>
When a tenant requests rent relief from their landlord, the request must be in writing and be accompanied by:
a statement from the tenant that they are an eligible tenant
a statement that the tenant satisfies the decline in turnover test (see next section), which includes setting out:
the tenant’s turnover for the turnover test period, including the turnover test period used
the tenant’s comparison turnover, including stating whether the relevant comparison period or a specific alternative turnover method was used
if an alternative comparison turnover method was used, how the comparison turnover was calculated
the tenant’s fall in turnover
the reduction in rent that would satisfy the minimum requirements of an offer of rent relief made by a landlord in accordance with the Scheme and
any other circumstances that the tenant would like the landlord to consider in making an offer of rent relief under the Scheme.
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.
<Decline in Turnover Test>
A tenant satisfies this test if the turnover for the turnover test period (January 2022) falls short of the tenant’s comparison turnover for the relevant comparison period (January 2020) by 30 per cent or more.
If the tenant closed for a week or more during January 2020 because of an event or circumstances outside their usual operations and started trading again before 16 January 2022, then they can use the:
turnover test period of December 2021
relevant comparison period of December 2019.
A tenant can also use an alternative comparison turnover if:
they started their business on or after 1 January 2020
there was an acquisition or disposal of their business on or after the start of the relevant comparison period and before the applicable turnover test period that changed their comparison turnover
there was a restructure of their business on or after the start of the relevant comparison period and before the applicable turnover test period that changed their turnover
their business has been affected by natural disaster during the relevant comparison period and this event changed their turnover
they are a sole trader or small partnership without employees who, due to sickness, injury or leave, did not work for all or part of the relevant comparison period and their turnover was affected as a result.
If more than one of these methods applies, the tenant can choose which one to use.
<Required evidence>
A tenant needs to provide evidence of at least one of the following to their landlord to show a fall in turnover:
Extracts from the tenant’s accounting records or
The tenant’s business activity statement(s) that relate to the relevant turnover test period (providing the G1 information – total sales – as highlighted in the ATO’s form) 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 a practising accountant
<Comparison and Turnover periods>
