SMSF arrangements to acquire property

20 Nov SMSF arrangements to acquire property

TA 2012/7: The ATO has become aware that certain arrangements entered into by self managed superannuation funds (SMSFs) to acquire property do not comply with superannuation law.

The purpose of this Taxpayer Alert is to warn SMSF trustees and advisors to exercise care; ensuring any arrangements entered into by an SMSF to invest in property are properly implemented, particularly those involving limited recourse borrowing arrangements (LRBA) or the use of a related unit trust.

The ATO is concerned that some of these arrangements, if structured incorrectly, can not simply be restructured or rectified; and unwinding the arrangement may involve a forced sale of the asset which could cause a substantial loss to the fund.