The Australian Taxation Office is warning trustees of the rapidly growing self-managed superannuation funds (SMSF) sector to be cautious with real estate investment.
Even though the rules on SMSFs investing in property have been relaxed during the past five years, the Tax Office is warning trustees to know and comply with the laws.
The acting commissioner of the ATO, Bruce Quigley, says some trustees are using their superannuation to invest in property without fully understanding their legal obligations, or are deliberately trying to skirt the law.
The ATO is also examining the aggressive marketing of property developers to investors, who are being advised to set up their own SMSF to hold real estate.
The ATO warns that proper documentation is essential and property should be held in a holding trust, which is a separate legal structure.
Breaches can result in a fund’s trustee being disqualified, civil penalties or even criminal charges.