Court says OK to lease SMSF property to related party

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Mike A, 25th Aug, 2018.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Mike A

    Mike A Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    2,656
    Location:
    UNIVERSE
    Full Court of Federal Court has ruled in favour of the Benson Family Super Fund which leased its reaidential property to the daughter.

    Lease was at market rates. Court held sole purpose test not breached.
     
    Mike A, 25th Aug, 2018
    #1
    Perthguy likes this.
  2. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,850
    Location:
    Perth, WA
    Surely there was some extra facts or rationale in this case that made it special?

    Or is this now a case authority for the proposition that market rate residential leases are now allowed?
     
    thatbum, 25th Aug, 2018
    #2
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    42,001
    Location:
    Australia wide
    This was unique because it was an investment in a managed investment scheme which basically was a unit trust which then created a subtrust with the subtrust holding a particular property. It was this property that was then leased to the daughter of a member of the SMSF which held 25% of the units in this subtrust.
     
    Terry_w, 25th Aug, 2018
    #3
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    42,001
    Location:
    Australia wide
    Terry_w, 25th Aug, 2018
    #4
  5. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,850
    Location:
    Perth, WA
    Having a quick skim of the decision so far - it looks like the unit trust, 25% holding issue wasn't what the case turned on.

    It was still more the market rent and other aspects of leasing out the rental?
     
    thatbum, 25th Aug, 2018
    #5
  6. Harry30

    Harry30 Well-Known Member

    Joined:
    4th Aug, 2017
    Posts:
    792
    Location:
    Melbourne
    Harry30, 25th Aug, 2018
    #6
  7. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,248
    Location:
    Sydney or NSW or Australia
    If it wasn't held in super and needed to make a loss, they succeeded.
     
    Scott No Mates, 25th Aug, 2018
    #7
  8. Mike A

    Mike A Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    2,656
    Location:
    UNIVERSE
    Mike A, 25th Aug, 2018
    #8
    qak likes this.
  9. Mike A

    Mike A Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    2,656
    Location:
    UNIVERSE
    It shouldnt as that trust is no different to an unrelated unit trust. Its not even an unrelated unit trust as the other holdings are held by related parties.

    Will be interesting to get the experts comments kn this. Could open up new opportunities
     
    Last edited by a moderator: 26th Aug, 2018
    Mike A, 25th Aug, 2018
    #9
  10. aroe

    aroe Active Member

    Joined:
    29th Nov, 2016
    Posts:
    28
    Location:
    Sydney
    Are there any updates to this?

    :)
     
    aroe, 15th Jan, 2019
    #10
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    42,001
    Location:
    Australia wide
    Plenty has been written DBA lawyers has an article on it as do many others.
     
    Terry_w, 15th Jan, 2019
    #11
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,544
    Location:
    Sydney
    I would not be hoping to replicate the court decision in a rush. A costly pathway if its allowed to other situations and more costly if its not. The specific issues with the case are quite unusual and rare
     
    Last edited: 15th Jan, 2019
    Paul@PAS, 15th Jan, 2019
    #12