This is my first attempt at a Forum Post.
I hope some-one can help or guide us.
#1 Son has just moved out of home. He is going to Uni. Whilst this was his decision – it seems obvious to us that we will be supporting him financially for a number of years – and then there are the three other kids to follow!
We think it would be a good idea to buy a suitable house/appartment for him within reach of Melb Uni.
The way we would like to do this is as a JV between our SMSF and our Family Trust. THe SMSF has funds that we can not get any real benfits out of for sometime – so given they are locked away – why not invest in a property?
I would like to know how to set htis up legally and in a tax / cash flow effective manner.
Can anyone help or know anyone who can help – as my usual contacts do seem to know or want to know.
Regards
George
Have a look at http://www.chrisbatten.com.au
If may be hard to do.Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi George!
Sounds like you intend to skate on some mighty thin ice!
You need to consider the “Sole purpose” tests for SMSFunds. To sumarise this means that the investment must be soley for the purpose of providing for your retirement. If you or a related party/entity also benefits from the investment you have failed the sole purpose test.
An example is if the SMSF buys artwork and you hang it in your lounge room. This fails the test as you have personal enjoyment of the artwork. Same applies if the fund buys jewellery, which you/or your wife wears. Shares in a golf club or yacht etc which you personally use.
Anyway you get my point. The ATO are all over this sort of thing and will punish you hard.
They will deem your fund as being non-complying and instead of paying a benifical tax rate of 15% you’ll get to pay 47% tax on the total assets in the fund. (Be VERY clear about what this means – The ATO takes half of everything the fund owns!)
If you want to pursue this I recommend you get very, very good advice and I would start with Chris Batten. I understand you will need to be prepared to pay for his advice though.
Keep in mind the ATO have retrospectively changed laws regarding SMSF to cacth people who dabbled in the grey areas. So while it might work now – you might find yourself back peddling and selling at a possible loss in future to avoid penalties.
Good Luck,
Greg
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