Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Property strategy raises alarms at Tax Office

ATO

Given current market conditions, the Tax Office is set to contact individuals it believes have risky property strategies in the wealth portfolios.

Australians with self-managed super funds (SMSFs) are permitted to leverage their savings to make investments.

Overwhelmingly, property is the most popular investment choice, and 95 per cent of all loans in an SMSF are for the purpose of property investment.

Activity spiked after 2007, when the leveraging strategy was first allowed by the federal government and regulators.

Advertisement
Advertisement

Now, the ATO is signalling its concern about the possibility of “concentration risk” in some funds. This means the savings and viability of a portfolio is compromised due to the dominance and reliance of one asset.

Concentration risk is compounded by falling property prices across Australia and struggling rental yields in some capital cities. The superannuation fund is required to service the debt, which requires decent cash reserves and equity.

The ATO will contact SMSF investors which it believes are at risk of compromising their retirement savings based on their property strategy.

“Trustees are legally obliged under the SIS Act (Superannuation Industry [Supervision] Act 1993) to consider diversification and liquidity risk as part of their investment strategy,” said assistant commissioner Dana Fleming.

“Where we identify potential concentration risk, we will write to trustees to ensure they adequately understand and mitigate the associated risks,” she said.

Property strategy raises alarms at Tax Office
ATO
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
MelbMan - We dodged a real bullet with Saturday nights Federal election result. ....
Anonymous - It means they won’t be stealing my tax refunds and cutting my retirement income by 30%....
Anonymous - Sorry ... 2 years de facto equals marriage and you can be carved up. This is Lionel Murphy’s no fault divorce where men are asset stripped and.......
Anonymous - The confiscation of Imputation Credit has been stopped, thanks to the Liberal minded Aussie voters that stand up to correct the inequality so that the.......