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CTRS 2021 Regulations now released | Update 17 - effects of Covid-19 on commercial tenancies

Updated: Feb 2, 2022

On 24 August 2021 the Commercial Tenancy Relief Scheme Regulations 2021 (“the Regulations”) were brought into effect in Victoria by Government Gazette S459. A copy of the Regulations is here:

There will certainly be more to say on these over the coming days and weeks – for now this article aims to convey just the effect of the Regulations.

The Regulations are long, and complicated. We’ve done our best to keep it as straightforward as possible and to break it down into manageable chunks here.

Please don't hesitate to contact our office with any queries or to discuss.


Eligible Lease

The Regulations apply to an “Eligible Lease”. An Eligible Lease is a lease that:

  • was in effect on 28 July 2021 (with a specific note that a renewed, varied or extended lease on substantially the same terms will be treated as having been in effect on that date);

  • is not subject to any of the exclusions (notably agricultural leases or leases where the tenant is a listed corporation); and

  • under which the tenant is an ‘Eligible Tenant’.

Eligible Tenant

To qualify as an Eligible Tenant a tenant must:

  • be an SME entity (with turnover in 2020/21 of less than $50,000,000);

  • have, as at 28 July 2021, carried on business (or been a non-profit body or deductible gift recipient);

  • not be subject to any of the numerous exclusions (relevantly a company in liquidation or a bankrupt individual - some more details of exclusions are at the foot of this article); and

  • satisfy the Decline in Turnover Test

Decline in Turnover Test

The Decline in Turnover Test will be satisfied if the tenant’s turnover in the Turnover Test Period was at least 30% lower than its Comparison Turnover. To determine this you will (obviously) need to identify three terms –

  1. Turnover;

  2. Turnover Test Period; and

  3. Comparison Turnover.

Turnover is, for all intents and purposes, defined in the same way as GST turnover, varied to specifically include state government COVID grants and to exclude federal government grants.

Unlike the position last year (which was limited to turnover arising only from the relevant premises) turnover will include all turnover of the tenant entity including turnover from online sales or sales from other sites.

The Turnover Test Period and Comparison Turnover will depend on the day the tenant commenced trade and is best set out by reference to the following table:

Special rules are available to tenants who received drought help concessions or 2019/20 bushfire relief. There are a large number of alternate comparison turnover tests – largely designed to reflect the Federal Government’s JobKeeper qualifications from last year. Details in this regard are set out at the foot of this article.

Process for obtaining relief

Regulation 27 deals with rent relief requests and the consequent obligation on the landlord to make an offer of rent relief.


A tenant under an Eligible Lease may request rent relief. The Request must in writing accompanied by a statement from the tenant:

  • that the tenant is an eligible tenant; and

  • that the tenant satisfies the Decline in Turnover Test (including setting out details of turnover test period, comparison period and decline).

The tenant may also set out any “other circumstances” that the tenant would like the landlord to consider when making an offer of relief.

Provision of evidence

Within 14 days of the Request having been made the tenant must provide evidence in support of the Request. The evidentiary requirements are similar to those in last year’s Regulations but now include a requirement that the tenant provide a statutory declaration stating that the information provided is true. More specific detail on the request and evidence requirements are set out at the foot of this article.

If a tenant fails to provide the evidence required within 14 days of the Request then the Request will lapse. The tenant will be entitled to make a further request, but if the tenant allows three requests to lapse then it will not be able to make any further requests (and so will lose the opportunity to seek relief).


Within 14 days of receiving the evidence required to be provided by the tenant the landlord must make an offer of rent relief in writing which must:

  • at a minimum be proportional to the tenant’s decline in turnover;

  • provide that no less than 50% of the rent relief is in the form of waiver (with the balance to be deferred); and

  • take into account the “other circumstances” that the tenant wanted the landlord to take into consideration – there is no specific requirement as to how such circumstances must be weighed, there is no stated entitlement on the part of the landlord to take into account its own circumstances. Although not shifting the minimum relief obligation it will be interesting to see how this requirement is considered by VCAT and the Courts (noting that in R & D Health Clubs Pty Ltd v Lin Wang Pty Ltd (Building and Property) [2021] VCAT 349 the Tribunal found that the tenant was entitled to a 100% reduction in outgoings, notwithstanding the Regulations relied on only required the landlord to “consider waiving” those outgoings).

The offer must relate to the “rent relief period” determined as follows:

  • if the tenant makes its application (and provides evidence) on or before 30 September 2021 the rent relief period will be 28 July 2021 – 15 January 2022;

  • if the tenant makes its application and provides evidence after 30 September 2021 the rent relief period will be from the date of the tenant’s request until 15 January 2022 (so a tenant making request and providing evidence on 1 October, instead of 30 September will lose more than 9 weeks of relief).

If any rent is deferred it is taken to be payable in equal instalments commencing not earlier than 15 January 2022 and running for two years or the balance of the length of the term (whichever is greater).

Similarly to last year if any rent is deferred the landlord must offer the tenant an extension to the term of the lease equivalent to the period for which rent is deferred (there is no obligation on a tenant to accept the offer and the landlord’s rent relief offer can’t be contingent on the tenant agreeing to the longer term). An example has been added into the Regulations to clarify ambiguity arising from that wording as follow:

If 3 months' rent is deferred, 3 months must be added to the term of the eligible lease.

Subsequent conduct

Following provision of the offer the parties must negotiate in good faith with a view to agreeing on rent relief.


  • agreement is not reached within 14 days of the offer being made; and

  • the landlord’s offer met the minimum requirements noted above; and

  • the tenant has not referred the matter to the Small Business Commissioner for assistance within 14 days of the offer being made,

then the tenant will be deemed to have accepted the landlord’s offer (even if the tenant has previously rejected that offer, and seemingly even if the landlord has subsequently made a more generous offer).

This is a significant shift from the position under last year’s Regulations, intended to avoid delay on the part of tenants, however the likely outcome would seem to be an increase in the number of applications to the SBC to avoid the deeming provision kicking in.


Although not allowing a tenant to subsequently become eligible, the Regulations provide for a re-assessment of the relief being provided.


  • a rent relief agreement has been made;

  • the tenant’s request for relief was prior to 30 September 2021; and

  • the tenant commenced trade prior to 1 April 2021,

the tenant must, prior to 31 October 2021, provide the following reassessment information:

  • turnover for the reassessment turnover test period (the quarter ending 30 September 2021);

  • comparison turnover (if the tenant commenced trade pre-July 2019 then the turnover for the quarter ending 30 September 2019; if the tenant commenced trading 1 July 2019 – 31 March 2021 then the turnover for the quarter ending 30 June 2021);

  • the change in turnover, calculated as the different between those two figures expressed as a percentage of the comparison turnover.

Again various alternate methods are available. The tenant must include a statutory declaration as to the veracity of the information provided.

It is unclear whether a tenant who has made a request prior to 30 September but has not yet reached agreed would be eligible/required to submit reassessment information.

If the reassessment change in turnover differs from the initial change in turnover then from 31 October 2021, the rent relief agreement will be deemed to be adjusted to reflect the new change in turnover.

Unless one of the exemptions apply (see below), if the tenant does not provide the reassessment information within time required then the rent relief agreement will be varied to remove any waiver component that would otherwise have applied from the re-assessment date.

Deferred components and the ongoing deferral of rent will be unaffected (it is notable that if the tenant’s trading position has substantially improved between the original test period and the reassessment test period then it may be in a tenant’s interests to not provide reassessment data).

The tenant’s rent relief agreement will not be impacted by failure to provide reassessment data if the tenant is unable to trade as a result of sickness, injury or natural disaster (or if the parties agree).

Protection for tenants

As per the 2020 regime a tenant under an Eligible Lease will not be in breach if the tenant does not pay rent or outgoings but will only receive that protection if:

  1. The tenant has made a rent relief request that has not lapsed for failure to give supporting evidence AND the tenant continues to pay rent, reduced by the tenant’s stated decline in turnover (so if the tenant has suffered a 50% decline in turnover the tenant will need to continue to pay 50% of the rent) – this second element is a marked difference from the position last year; or

  2. If a relief agreement has been reached – the tenant pays rent and outgoings in accordance with the agreement; or

  3. The tenant is unable to trade due to sickness, injury, or natural disaster – this is a significant additional protection raising some concerns – a tenant unable to trade (and noting ‘natural disaster’ is undefined and might include COVID (the pandemic is a declared Disaster for relief fund purposes)) would be protected in respect of non-payment of rent or outgoings even if the tenant has not made a rent relief request.

Prohibition on rent increases

Similar to the 2020 regime, the Regulations provide that a landlord under an eligible lease must not increase the rent payable under the lease at any time between 28 July 2021 and 15 January 2022 (the Protection Period). This will apply regardless of whether or not the tenant has requested rent relief.

**a clarification here - the tenant does not need to request rent relief for this prohibition to apply, but the lease does still need to be an eligible lease (and so the tenant still needs to satisfy the decline in turnover test, whether or not they have told the landlord)**

Critically (and differently to last year) the Regulations provide that if an eligible lease called for a review of rent during the Protection Period that would see a increase in rent “that review is voided and may never be claimed by the landlord”.

This could be hugely significant – fixed increases will be lost forever (which will have a cumulative effect on future rents) and, more importantly, market reviews due during the period will operate with a ‘reverse ratchet’ – rent could decrease, but would not be able to increase.

This will apply on mid-term market reviews but also on market reviews falling due because of a renewal of the lease.

Dispute resolution

For all intents and purposes the dispute resolution procedures work in the same way as last year's regulations.

The Small Business Commissioner will have power to conduct mediations. The Small Business Commissioner will be able to issue a binding order against a landlord who doesn't engage in the mediation process on the application of a tenant - this is substantially as per last year and takes up a huge swathe of Regulation despite only being used extremely rarely last year.

If a mediation fails the SBC can issue a certificate to that effect that will then enliven the jurisdiction of VCAT and the Courts. VCAT will have broad powers to hear disputes once such a certificate has been issued. Interestingly VCAT may have regard to the conduct of the parties in connection with rent relief discussions under the 2020 Regulations.

Differences from what was promised

The Regulations differ in a number of respects from what had been foreshadowed by Press Conferences and Parliamentary question time.

Far and away the most relevant factor in this regard is the ability for tenants to rely on September quarter 2021 figures to demonstrate decline in turnover. This had previously been flagged as June quarter figures which would have excluded swathes of tenants who had recovered well during April/May before being hit by repeated and extended lockdowns. This change is assumedly in response to the ongoing nature of lockdowns and will come as welcome news to tenants.

A landlord's ability to seek binding orders from the SBC was flagged in Parliament but has not made it into the Regulations. This might disappoint some landlords but the 14-day "deemed acceptance" provision will likely be a more than adequate replacement (particularly given the rarity of anyone going through the binding order process).

In Parliament the Minister indicated that tenants who had not complied with 2020 relief agreements would not be eligible for relief under these arrangements - that has not made it into the Regulations (although VCAT may take the conduct of the parties under the 2020 Regulations into account when determining a dispute under the Regulations, which is perhaps a nod to this element).

Other matters

A tenant can request subsequent rent relief if their financial circumstances materially change – although it is difficult to see this being put to any great effect, particularly noting the reassessment provisions already in place.

If rent has been deferred under the 2020 Regulations and the tenant remains an eligible tenant who has requested rent relief under these new Regulations then the 2020 deferral repayments will be paused until 15 January 2022 (at which point instalments will recommence).

The Regulations deal with outgoings in the same way as last year (a landlord must “consider waiving” recovery of outgoings). The decision of the Tribunal in R & D Health (referred to above and the subject of our Update 13) would seem to continue to hang the prospect of 100% outgoings relief over a landlord.

A tenant under an eligible lease will not be in breach for reducing opening hours or ceasing to carry on business at the premises. This extends to leases that would be eligible leases even if the tenant does not satisfy the decline in turnover test.

It is an offence for either party to provide false or misleading information.

A new regulation has been inserted to note that to the extent a landlord holds an indemnity against a guarantor the indemnity cannot be relied upon to defeat the effect of the Regulations. This is consistent with Section 93 of the Retail Leases Act but begs the question - in the absence of that provision could a landlord seek to rely on indemnities to make itself whole in respect of relief granted under the 2020 Regulations?

Some more detail

The below gives more detail on items flagged briefly above.

Exclusions to eligibility

In keeping with last year's Regulations and consistent with exclusion of non-SMEs, a tenant will be excluded if it is part of a group of entities that together have turnover exceeding $50,000,000 in the 2020/21 financial year.

The following tenants will also be excluded (and noting the other qualification requirements some of these seem very specific and reasonably unnecessary):

  • a corporate tenant that has had a liquidator or provisional liquidator appointed;

  • an individual tenant who has had a trustee in bankruptcy appointed;

  • a tenant who was, prior to 1 July 2021, subject to, or a member of a group that was subject to, a levy under the Major Bank Levy Act (effectively excluding the 4 big banks and Macquarie);

  • any Australian government agency;

  • any local governing body;

  • any sovereign entity

  • a lease under which the premises is wholly or predominantly used for agricultural, pastoral, horticultural, apicultural activities, farming, grazing, agistment or similar uses.

Alternative tests

Whereas last year's Regulations could rely on JobKeeper eligibility to determine relief eligibility, the 2021 Regulations have gone into great detail to allow tenants who may not meet the eligibility criteria set out in the table above for a number of reasons by providing a series of alternative tests to determine the tenant's comparison turnover.

The alternate tests largely mirror the JobKeeper alternative tests and are as follows:

  • Business acquisition or disposal changing turnover alternate test;

  • Business restructure changing turnover alternate test;

  • Substantial increase in turnover alternate test;

  • Business affected by drought or natural disaster alternate test;

  • Irregular turnover alternate test;

  • Sole trader or small partnership sickness, injury or leave alternate test;

  • Temporary cessation of trade alternate test.

The ATO published some commentary in relation to each of these tests (in the context of the Federal JobKeeper legislation) here: Alternative test | Australian Taxation Office ( But it should be noted that a number of the tests are open to broad interpretation. This may be fine in a non-adversarial context of distributing JobKeeper payments into the economy, but creates uncertainty in the face of contested relief discussions. In the absence of any definitions reliance on some of the alternate tests is likely to lead to dispute (to take one example only - the Regulations do not define what a 'business restructure' actually is).

If relying on an alternative test, when making a rent relief request the tenant must set out details of which test it relief on and how it then calculated its comparison turnover.

Requirements of relief request

A rent relief request must be in writing and accompanied by a statement that the tenant is an eligible tenant and that the tenant satisfied the decline in turnover test. It must set out:

  • which turnover test period the tenant has used;

  • the tenant's turnover for the turnover test period;

  • whether the tenant relies on the ordinary comparison period or utilised an alternative turnover method;

  • if the tenant utilised an alternative turnover method, details of how the turnover was calculated (tenants should assume this requires them to set out in detail the calculations relied on);

  • the tenant's decline in turnover;

  • the reduction in rent that would satisfy the landlord's minimum offer obligations under Regulation 27(8) (being reduction in rent proportional to reduction in turnover); and

  • any other circumstance the tenant would like the landlord to consider when making an offer.

It is notable that setting out (1) test and comparison period turnover, (2) decline in turnover, and (3) reduction in rent required are all separate obligations (even though just giving test and comparison period data would enable the landlord to figure out the rest).

There are no limitations on circumstances that the tenant would like the landlord to consider - accordingly the tenant could introduce issues broader than simply the COVID effects on their business.

To avoid the request lapsing the tenant must, within 14 days of making its request, provide information to the landlord "that evidences the turnover figures contained in" the request. That information must include at least one of:

  • extracts from the tenant's accounting records;

  • the tenant's business activity statements;

  • the tenant's bank statements; and

  • a statement prepared by a practising accountant.

The tenant must also include a statutory declaration, made by the tenant (or an office of a corporate tenant) stating that the information and evidence provided is true (to the best of the tenant's knowledge and belief).

In negotiations as to the 2020 Regulations landlords would regularly insist on seeing a tenant's BAS as the only document amounting to 'evidence' (noting particularly that statements by accountants are generally stamped with a warning that the statement is being made based on information provided by the tenant).

In circumstances in which most of the test and comparison periods available do not rely on financial year quarters, most tenants won't have a BAS statement to support their request. It remains to be seen what landlords will accept from a practical perspective but it is incumbent on the tenant to provide evidence of turnover - tenants should be careful to ensure they are meeting that threshold.

If a tenant makes an initial request, but the evidence it arranges reflects different figures the tenant should accompany the evidence with a new request - so the tenant has not made a request using one set of figures, and provided evidence of another set of figures. That situation would not amount to a valid request.

The two-week gap between request and evidence might see some tenants seek to game the system:

A tenant will be protected from non-payment of rent once it serves its request (provided it meets other requirements). If it then does not provide evidence the request will lapse after two weeks and the protections will cease. But the tenant can re-start its protections, allow another lapsing, and then do that a third time. A wily tenant, looking to maximise time available to it without paying rent and entitled to a two-week default notice before the landlord could terminate, could use this tactic to buy themselves 12 weeks without paying rent. This has the potential of being a source of huge frustration for landlords. If a tenant makes a request on the basis of a false statement this is a breach of the Regulations and an offence - not recommended.

Please don't hesitate to contact our office with any queries!

Paul Nunan


Accredited Specialist | Commercial Leasing


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Hi Paul

Great summary.

I note the reference in your article to the turnover test period being three consecutive whole calendar months, however the Regulations appear to simply refer to 3 consecutive months.

Do you think there is scope for a tenant to commence their turnover test period mid-month provided that it represents 3 consecutive months (e.g. 13 June to 12 September)?

This may be beneficial for tenants who are seeking to maximise their turnover reduction, whilst ensuring that their request is made in advance of 30 September (noting that it will remain subject to the reassessment).

Interested to hear your thoughts.

Paul Nunan
Paul Nunan
Aug 26, 2021
Replying to

Hi there, thanks for your note. The last part of Regulation 13(1)(a) requires that the selected period must commence "on the first day of a month"; so whole calendar months are required (which will make including September in an application for relief back to 28 July very difficult).


If a tenant chooses the 3 consecutive months of July August and September and makes a request before 30 September and supplies evidence early October are they still required to undertake the reassessment process by the end of October as the reassessment requires the September Quarter as well.

Replying to

Thanks Paul, final question ... reassessment that captures the September quarter is that applied to October, November December & Jan Rent or Rent owing from November onwards?


Geoff Bowyer
Geoff Bowyer
Aug 24, 2021

Excellent summary Paul, thank you for this diligent and extensive review of the new Regs which have finally come into play.


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