Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

Beware of using family to build SMSF property

By Grace Ormsby · August 09 2019
Reading:
egg
egg
egg
Property
Beware of using family to build SMSF property

Beware of using family to build SMSF property

author image
By Grace Ormsby · August 09 2019
Reading:
egg
egg
egg
Property

Last week, Nest Egg considered the question of whether individuals could develop their SMSF property via a knock down and rebuild. While being a compliance minefield in itself, this could become even more complicated where family members are involved in the development.

Townsends Business and Corporate Lawyers solicitor Jeff Song has reminded SMSF property owners that from a compliance perspective, it would be safer for an SMSF manager to “engage entities that aren’t related to the fund” and be “mindful of the prohibition against providing financial benefits to the members and/or other related parties”. 

If, however, an associated entity is involved, Mr Song said “the SMSF’s dealing with the entity must be on arm’s length terms, and appropriate documentation should be in place to support this”. 

Before members or their families are engaged for any paid service, Mr Song reminded SMSF-associated individuals to consider the prohibitions against financial benefits for related parties, “and ensure there is rationale for engaging their service and their pay rate”. 

“You should also ensure that the fund does not acquire assets such as building materials from related parties of the fund,” Mr Song also flagged. 

Advertisement
Advertisement

He went as far to warn that SMSF property owners who are developing their property and acquiring assets such as building materials should not acquire assets from related parties of the fund. 

“Make sure the fund trustee buys directly from third parties or obtain advice about having an agency agreement in place for purchasing materials through related parties.”

Mr Song said that the above considerations are not exhaustive and not suited for all circumstances and therefore recommended interested or affected SMSF property owners “obtain formal advice before committing to such investment”.

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article
author image

About the author

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

From the web

Recommended by Spike Native Network

Website Notifications

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

Copyright © 2019 MOMENTUM MEDIA