Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

SMSF need to be careful with property investments

Nov 21, 2012

Following the ATO's warning today of trustees of self-managed superannuation funds (SMSFs) to be cautious when investing in property, it is recommended that you have a read of their Taxpayer Alert 2012/7.

Acting Commissioner Bruce Quigley said he is concerned people are using their SMSF to invest in property without fully understanding their obligations under the law or some people are seeking to take advantage of certain types of arrangements.

Mr Quigley acknowledged that investing in property can be a confusing area for some people.

"We have observed that some arrangements are deliberately entered into to get around the law, which can result in the fund's trustees being disqualified, facing civil penalties or even facing criminal charges. Those marketing properties to SMSF trustees as part of such arrangements could be referred to Australian Security and Investment Commission (ASIC)."

"The fine details are important and trustees need to be sure that property is the right investment for their SMSF and that the arrangement is legal,"

"We have also seen instances where holding trusts have not even been established at the time the contracts to acquire are signed. In other instances the title of the property is held in the individual's name rather than the trustee of the holding trust. Another common mistake is gearing in a related unit trust, which is not allowed under the law," Mr Quigley said.

"Some of these arrangements, if structured incorrectly, cannot simply be restructured or rectified. The only option may be to unwind the arrangement which could involve forced sale of assets at an inconvenient time. This could be very expensive for the fund with potential stamp duty and tax consequences."

"I urge trustees to get reliable, independent advice when making investment decisions and to obtain advice from us if they are contemplating entering into these sorts of arrangements. The responsibility for ensuring their SMSF complies with the law rests with them."

Taxpayer Alert 2012/7 is available from www.ato.gov.au/atp

More information on SMSF's is available at www.ato.gov.au/superfunds or by phoning 13 10 20.

Taxpayer alerts are intended as an 'early warning' to taxpayers and their advisers of significant tax planning arrangements that the ATO has under risk assessment.

Tags:

Author: Mr Taxman

Comments

"It is very important for investors to be careful while investing. A good investment can be beneficial for you. Nice information, Many thanks to the author. <a href="http://www.activesmsf.com.au/mortgage-brokers/default.aspx">SMSF Borrowing</a> "

By: SMSF Borrowing on Jan 24, 2013 12:24PM

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • "Good Day Sir/Madam: Do you need an urgent loan to finance your business or in any purpose? We are certified,legitimate and international licensed Loan Factory we offer loans to Business..."

    By: bdsfn.com@gmail.com at Jun 22, 2017 11:52AM

    Post: Nothing negative about investing in Germany

  • "Hi there, I am non resident and just bought a property in Perth. Property price was $800k, Australian bank had lent me $200k against the property, and rest $600k I have loaned from my bank in UK..."

    By: Nick at Jun 16, 2017 12:00AM

    Post: Buying property as non-resident

  • "Hi there, I have an enquiry regarding CGT please. My son purchased a house nearly six years ago (6 years this December 2017) When he purchased he lived in it for 8 months but then he decided he..."

    By: maree at Jun 15, 2017 11:45PM

    Post: Little known ways to reduce capital gains tax on your investment property

  • "I have a similar situation. I live overseas but visit Australia and am an Australian resident for tax purposes. I am marrying an American who also lives overseas. I have a property in Australia so it..."

    By: Bron at Jun 14, 2017 7:32AM

    Post: Marriage

  • "I have recently got a job as a contract sales consultant and spend a lot of time on the road, but they don't offer a car allowance, I pay for all exspenses on a flat hourly rate."

    By: Sandy at Jun 13, 2017 10:26AM

    Post: Claiming car expenses