The ATO recently released a statement about their concern over people investing into property with their super without fully understanding their obligations under the law.
Their concern is based on real life examples where incorrect structures or lending arrangements have been setup by the individuals.
This has resulted in a number of funds becoming non-complying and penalties being issued for the breaches. This problem is caused by trustees trying to implement the complete strategy without getting the appropriate advice and having so many parties involved in the process.
Here is a short list of some common mistakes;
- Incorrect entity name on the front page of the contract
- Purchasing the property directly in super without setting up the Bare Trust arrangement
- Incorrect lending arrangements where the name of the lender is the incorrect entity
- Rental income and Interest expenses coming or going into the wrong bank account
- Using the same Corporate Trustee for both the super and the bare trust to reduce the costs
- Using the property for personal use (including related parties)
- Lack of liquidity within the Self Managed Superannuation Fund
Buying property in super can be a very valuable strategy if it is implemented correctly and it is appropriate for your situation. WFS Canberra has been providing advice on implementing Super and Property strategies for over ten years and has experience in all aspects of buying property in super including;
- Establishing an SMSF
- Obtaining loan approval for an SMSF to buy property
- Establishing a Bare Trust
- Sourcing Property for an SMSF
- Ensuring your Investment Strategy is sound and acceptable to the ATO
- Holding your hand through all aspects of the transaction to ensure it progresses smoothly and avoids all ATO scrutiny.