Hello Kate
To the extent the rent that is pre-paid is refundable should the tenancy be terminated, it would be assessable only to the extent that the 9 month prepayment period falls within the relevant income year.  The portion outside this income year is assessable in the next income year. Refer to paragraph 23 of TR 2002/14. TR 2002/14 | Legal database
If a prepayment of rent is refundable by the landlord should the rental agreement be terminated then given assessability is determined on an emerging profits basis (that is, the SMSF is only assessed on the rental income that relates to the current income year) then there would appear to be no section 295-550 of the ITAA 1997/NALI issues.  That is, the taxable income assessed to the fund is not greater than that which would have been assessable if the tenant was arm’s length.
Best regards
The Auditors Institute