Can an SMSF Buy Property in Thailand?

Buying property overseas can be attractive to Australian investors, including SMSF members considering property investments in Thailand. However, purchasing and holding Thai property through an Australian SMSF involves both Australian superannuation requirements and Thai property laws.

One important issue is the use of a trust structure to hold Thai property.

Can a Trust or SMSF Hold Property in Thailand?

Foreign investors should be aware that Thailand does not generally recognise trusts or SMSFs in the same way as common-law jurisdictions such as Australia.

The main Thai legislation dealing with trusts is the Trust for Transactions in Capital Market Act B.E. 2550 (2007). This legislation permits trusts for specific capital-market purposes, including certain securities transactions, securitisation and other transactions that promote or facilitate the capital market.

It does not provide a general framework for establishing a trust to hold personal assets such as a condominium in Thailand.

Accordingly, a trust or SMSF should not simply be assumed to be an appropriate structure for acquiring and holding Thai real estate.

Can an SMSF Own Property in Thailand?

An SMSF may invest in overseas assets, but the investment must comply with Australian superannuation law, the SMSF’s investment strategy and the fund’s governing documents.

The structure used to acquire the property also needs to comply with the laws of the country where the property is located.

In Thailand, foreign ownership of land and property is subject to specific restrictions. For example, foreign nationals may be permitted to own certain condominium units, subject to the applicable foreign ownership restrictions and other requirements. Ownership of land is subject to substantially greater restrictions.

This means that the type of Thai property being purchased is critical.

Before entering into a contract, trustees should establish:

• what type of property is being purchased;
• whether the SMSF or its proposed holding structure can legally acquire the property;
• whether foreign ownership restrictions apply;
• whether the property can be held for the benefit of the SMSF;
• how the purchase funds must be transferred into Thailand;
• what evidence of the source and transfer of funds is required; and
• whether the proposed investment satisfies Australian SMSF rules.

What About Purchasing Through a Company?

In some circumstances, a Thai company structure may be relevant to a property investment. However, establishing a company does not automatically overcome Thailand’s foreign ownership restrictions.

The proposed structure should therefore be reviewed by a qualified Thai lawyer or other appropriately qualified Thai professional before the SMSF commits to the transaction.

Where funds are transferred from Australia to Thailand to purchase a condominium, the relevant banking and foreign-exchange documentation may also be important. Depending on the transaction, evidence such as Foreign Exchange Transaction (FET) documentation may be required for the registration of the property.

The exact requirements should be confirmed with the Thai bank and local legal advisers before funds are transferred.

How Can iCare Super Help?

At iCare Super, we understand that an overseas property investment can involve several different legal, tax and compliance requirements.

We can assist SMSF trustees by:

1. Helping establish the appropriate structure

We can work with you and your professional advisers to consider an appropriate SMSF investment and ownership structure for a proposed Thai property investment.

2. Advising on SMSF compliance requirements

We can help trustees understand the Australian SMSF requirements that may apply to an overseas property investment, including the fund’s investment strategy, documentation and ongoing compliance obligations.

3. Coordinating document translation

Where required, we can help arrange for appropriately qualified translators to translate relevant Thai property and legal documents into English.

4. Working with local professional advisers

Thai property law is specialised. Where legal advice is required, we can work alongside appropriately qualified Thai lawyers and other local professionals so that the Australian SMSF requirements and Thai legal requirements can be considered together.

Planning to Buy Property in Thailand Through Your SMSF?

Buying overseas property through an SMSF should not be treated in the same way as purchasing an Australian investment property.

The structure should be considered before signing a contract or transferring funds. This can help identify potential ownership, foreign-investment, banking, tax and SMSF compliance issues at an early stage.

If you are considering purchasing a condominium or other property in Thailand through your SMSF and would like assistance with the SMSF structure and compliance requirements, please contact iCare Super before proceeding with the purchase.

We can help you understand the Australian SMSF requirements and coordinate with appropriately qualified Thai professionals where local legal advice is required.

Disclaimer

This article is provided for general information purposes only and does not constitute legal, financial, tax or investment advice.

Thai property ownership and foreign investment laws can be complex and may change over time. The information in this article should not be relied upon as confirmation that a particular property, ownership structure or transaction is legally permitted in Thailand.

Before purchasing property in Thailand, trustees should obtain independent legal advice from a qualified Thai lawyer regarding foreign ownership, property title, the proposed ownership structure, foreign exchange requirements and any other applicable Thai laws.

SMSF trustees should also ensure that the proposed investment complies with Australian superannuation and tax laws. iCare Super does not provide Thai legal advice and does not guarantee that a proposed property transaction will be permitted under Thai law.

The information in this article is current only as at the date of publication and should be independently verified before action is taken.