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

  • "A really interesting question Mel. Whilst negative gearing of a rental property is great for the higher earning spouse as there is a nice tax deduction which comes back to them, it comes to bite..."

    By: Mr Taxman at Mar 04, 2020 9:36PM

    Post: Marriage

  • "Your refund is your asset. It would be up to the courts to determine if you have to share your assets when you settle your split."

    By: Mr Taxman at Mar 04, 2020 9:28PM

    Post: Marriage

  • "Sorry to hear Emma. Generally speaking when it comes to completing your income tax return and including spouse details, a spouse includes another person who: * you were in a relationship with that..."

    By: Mr Taxman at Mar 04, 2020 9:22PM

    Post: Marriage

  • "Admittedly not too much depreciation with a 2011 car but there will still be a few $$$ there still. My motto is that you would pick up $20 if it was on the ground so why not claim it in your tax..."

    By: Mr Taxman at Mar 04, 2020 8:59PM

    Post: Claiming car expenses

  • "Geez 15 hours is a long shift. I certainly hope you get some breaks during the week. Generally, meals are considered a private expense. You can only claim a deduction for meals when you receive..."

    By: Mr Taxman at Mar 04, 2020 8:48PM

    Post: Claiming car expenses