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The SMSF is good as -the taxpaying vehicle – but very restricted/ cumbersome to administer/operate eg use of asset;borrow;audit.A trust containing a duplex where theres still a discretion as to which of its 2 beneficiaries income or capital upon sale goes to- would not be bound by SMSF rules even though the SMSF is a possible beneficiary -if that SMSF contributes NOTHING to the trust (not on original purchase; no $ on transfer to the trust or on duplex maintenance) The trustee-could- intend to, and could send 100% of profits or sale price to the other benificiary —-not to the SMSF! .
The question is– may I be the trustee of a bare trust to be a tenant-in- common with me in the non-strata duplex(one tenanted;1 our holiday unit)I sole-owner own , by transfering (for stamp duty )$105,000.00 of market value August 1 -and with the bare trust does a(n initially) fixed ownership benefit ratio HAVE to pertain as between the 2 beneficiaries(SMSF& me ) to disbursements from the bare trust ?
I would still use the holiday 1/2 duplex , the SMSFs land tax threshold is fully taken up already ; my personal LT threshold is exceeded currently (only because of exempt farmland they do count -in to establish LT rate on proportion of duplex ) .I would prefer a bare trust but if discretion doesnt also apply ;would use a discretionery one ,instead.(The titles office says its fine for me to be trustee & beneficiary -as long as there is one OTHER benificiary). Thanks .
Answer
It is not a bare trust if 2 beneficiaries, a bare trust must be one where one person only is entitle to the income and capital.
The very existence of a SMSF creates the cumbersome administration regardless of the assets held.
You are not permitted to use a property owned by the SMSF if not strata or sub divided and the SMSF is a tenant in common with you then it would own 50% of each side, so you would not be able to use it as a holiday home.
Sounds like you already own the duplex so the SMSF is not be permitted to buy the property off you or any associated entity such as a trust
There are rules that prevent a trusts distributing to a superfund to avoid the caps. It is different if it is a unit trust and the distribution is a return on investment but it doesn’t sound like you intend for the SMSF to make any investment.
If the super fund buys an investment with a member one of the many rules is that the super fund must do it with the sole purpose of providing for the members retirement or death benefit so if it appears that the SMSF’s cash was really just used because you wanted to invest in the property but didn’t have enough cash so let the SMSF buy part of it, then it could be in contravention of the sole purpose test. It really needs to be the other way around that the SMSF was a bit short so you bought part of the property. Note once you buy part of a residential property the SMSF will never be able to buy that part off you.
I am not sure what type of advantage you are looking to gain here and I am very cautious about SMSF transactions because the penalties for not complying are just not worth it.
I am a bit confused as to what you are planning to do but think you are talking about the SMSF buying part of a residential property off you. This can’t be done as stated above nor can it invest in a trust that buys that property off you, nor can it receive a distribution of profits from a trust that it has not invested in. Further if the trust owns the property then it would be the land tax rules that apply to the trust not the SMSF. I have given you the specific rules that may help you in your decision process rather than trying to analyse what you are wanting to achieve. You need professional advice before you go any further and that sort of big picture advice is not possible through this service. It should really be done in person.
