Choosing an investment structure to meet in-house asset rule

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An SMSF investing with a related party must be careful not to breach the in-house asset rule. Donald and Melania are members of the Trumpet Super Fund and directors of the corporate trustee, D & M Pty Ltd. Their son Louis runs a building business and is a sole director and sole shareholder of LT

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16 Nov 2020

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Low interest rates prompting LRBA refinancing

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SMSF trustees should not give into the siren call of low interest rate refinancing of their Fund’s loan until they have considered these points. In the current low-interest rate environment, there has been an increased interest in refinancing an existing limited recourse borrowing arrangement (‘LRBA’) with a related party lender. For this financial year, the

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28 Oct 2020

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Does a mistreated parent lead to loss of inheritance?

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Can a child treat his/her parent badly and still expect a share of the parent’s estate? The latest case highlights the answer. You don’t need to scour the bookshops for a good story about the power struggles in a dysfunctional family.  Just read Mr Justice Slattery’s judgement in Grant v Grant (No.2) 2020 NSWSC1288 This story pits

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23 Oct 2020

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Six member SMSF as pooled investment structure

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There is currently legislation before Parliament to increase the maximum number of members of SMSFs from four to “not more than six”.  When passed, the measure will commence from the start of the first quarter that begins after the Act receives Royal Assent. Background In the Explanatory Memorandum to the amendment legislation (Treasury Laws Amendment

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19 Oct 2020

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Buy your retirement home now in your SMSF and use it when you retire?

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Garry and Betty are the directors of the corporate trustee of their SMSF.  They are contemplating acquiring a property through their SMSF, which they plan to lease to an unrelated third party at market value until both of them reach their preservation age and retire as a condition of release. They want to know whether

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16 Oct 2020

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Asset rich, cash poor: Meeting cash obligations with all eggs in one basket

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What to do when the fund owns a property and one of the members dies.  Can the fund delay selling the property to pay the death benefit? A self-managed superannuation fund (“SMSF”) is an investment vehicle granted tax concession because it has the sole purpose of providing aged pensions in retirement for its members.  Members

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14 Oct 2020

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SMSFs and derivatives – a potential diversification option

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Investing in derivatives has been one of the popular investment options for savvy investors. As the ATO has been posing the question to some SMSF trustees whether their investments are appropriately diversified, do derivatives provide legitimate diversification opportunities for SMSFs? In a nutshell, superannuation laws do not prohibit this type of investment, however SMSF trustees

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02 Sep 2020

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Working through live-in aged carer issues

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With many baby-boomers dreading the prospect of going into an old-folks home, house-sharing may look like the answer. Doug is almost 80 but in quite reasonable health.  He can do a lot of things but his deceased wife used to run their home and he’s having issues handling everything. Hazel is in her early 60’s.

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20 Aug 2020

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New testamentary trust law

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New law closes loophole on Favourable Tax Treatment of Income from Testamentary Trusts. Testamentary trusts are trusts created by the testator under the will to be established upon the death of the testator. These trusts provide benefits such as asset protection (i.e. to protect a beneficiary who is prone to potential liabilities and matrimonial disputes)

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14 Aug 2020

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Five traps for SMSFs buying off-the-plan

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John and Mary are looking to acquire an off-the-plan property through their SMSF. They need to consider the five following points. 1. Purchaser named on the contract It is important that the correct entity is named on the contract of sale to avoid any adverse tax consequences. If John and Mary’s SMSF will not be

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12 Aug 2020

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