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SMSF Updates

Taxpayer alert: Diverting property development profits to SMSF

27 Jun, 2023
he ATO has issued Taxpayer Alert TA 2023/2: Diverting profits of a property development project to a self-managed superannuation fund, through use of a special purpose vehicle, involving non-arm’s length arrangements. The Alert states that the ATO is reviewing arrangements under which:
  • one or more self-managed super funds (SMSFs) have, or acquire, direct or indirect ownership of a special purpose vehicle (SPV) that undertakes a property development project, and
  • because of the non-arm’s length arrangements between the SPV and other entities, the SPV derives a profit that ultimately benefits the SMSFs which is more than what it would have been if all the parties had dealt with each other at arm’s length.

The Commissioner will consider whether such dividends and other income received by the SMSFs are non-arm’s length income (NALI) as defined in s 295-550 of the ITAA, and the application of the regulatory requirements in the Superannuation Industry (Supervision) Act 1993 (SISA) and other relevant law in respect of these arrangements.

Trustees of or advisers to an SMSF that is looking to participate in a property development are urged to refer to the SMSF Regulator’s Bulletin Self-managed superannuation funds and property developmenton how SMSF trustees can ensure they meet their income tax and regulatory obligations when participating in property development activities.


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