Update on recent SMSF investment issues

At Dangerfield Exley Lawyers, we can help ensure your clients’ SMSF strategies are legally compliant from the outset.

At Dangerfield Exley Lawyers, we can help ensure your clients’ SMSF strategies are legally compliant from the outset. We carefully review property contracts and related SMSF documents before investment transactions are entered into. We constantly review private rulings on a case-by-case basis, interpretive decisions from the ATO and look to update you and our clients on practical work-around to help get these transactions completed- recent topics of interest-

  • ATO ID 2014/4- Involved a related-party LRBA and this ATO interpretative decision suggested a LVR of 80% may give rise to NALI (non-arm’s length income). Upon reflection I believe the combination of an interest rate of 0% with this case scenario may have had a greater sway towards this leaning on the ATO’s decision than the LVR component in its own right.
  • Last year the FSI (Financial Systems Inquiry) recommended LRBAs may have a limited lifespan- most concern on this change would be OTP purchases and may be to consider or at least advise your clients of an urgent related party loan as a work-around. Doubtful this recommendation would eventuate but worth advising clients in any event.
  • Practical tip- In Victoria always check with proposed client Lender as to their timing requirements for the execution of the Bare trust Deed as unfortunately no consistency across the industry.

Don’t delay. Call Steven or Simon before your clients sign anything. Or read our SMSF Investment Pre-Purchase Checklist. It’s a sensible place to start.

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