There is nothing new here and you would be close to a MIS – Managed Investment Scheme. Do it twice (20 people) and you are in the sights of ASIC & Corporations Act 2001, S708(1). Get it wrong and you are automatically guilty of a criminal offence and jail beckons.1. Use a trust, why ? it does not pay tax, and it has the 50% CGT discount., and its…[Read more]

Hi Jason and All,I think you should make a decision to do both. How can you have a property which is a Home and an Investments Property ?.By using a special structure which can accommodate both positions, and can also include your super balances and forward contributions.The set up fee is around $5,000 plus Gst.$5,000 set up cost is reduced by tax…[Read more]

Hi Paullie & MikeNo, the SMSF Trustee is the boss (it is the only party with money) and negotiates and makes offers the Custodian is the slave and is directed by the SMSF to hold the asset until the debt can be cleared. Before you make any offers you should research your cash flow requirements in the SMSF to ensure that you purchase is financially…[Read more]

Hello again PaullieThere is an old saying on the "Golden Rule" which is "he who has the gold makes the rule".There is a bit of mystique around this LRBA (Limited Recourse Borrowing Arrangement) but the essential points to understand are these:The SMSF Trustee is the financier in all transactions, and understanding the effect of this is critical…[Read more]

Hi Paullie,You have most of it right.The Structure. your SMSF Trustee must have all 4 members as Directors, this is what the SIS Act requires. However it says nothing about shareholders a critical omission as the company and the Directors have to follow the resolutions of the shareholders. This is a very strange anomaly. It would be normal and…[Read more]

Hi Rory, Richard & AllUnfortunately there has been some loose talk on this subject.let me please help you all, unless you explain in detail EXACTLY what you propose and HOW you intend it to be implemented you will fail if the ATO later decides to examine the transactions.Example:Richard,  I take issue with you on a planned continual strategy…[Read more]

Hi Rory and AllThanks for the info Rory, so your SMSF puts up $100K and the vendor puts up the balance, Then you share the profit 25% – 75% ?What does the bank do ? its irrelevent if the vendor replaces the bank and the fund has not borrowed unless the title has been changed to the SMSM – Security Trust. ?ORYour SMSF has $100K deposit and the…[Read more]

Hi Rory and AllI have been establishing SMSF's and planning asset acquisitions mainly in real estate since the late 1970's but this description by you Rory has me baffled. You have  $100K in capital which takes up a 25% interest in a property. Who supplies the other 75% – $300K ?. How does the SMSF gain a 40% return but only provide 25% of the…[Read more]

TerryTry reading SMSF Ruling  SMSFR 2009/1 its all about BRP, you may be surprised at what it includes.However I cant see the point in putting a lease expense in a SMSF and it will probly breach S65 anyhow.Another issue is that the above ruling states that property laws state that any appurtenances which are attached become part of the land…[Read more]

Hi Terry & AllYou mean S66 (3) ?Well I see this as a permitted act, as it does not result in a breach for the reasons stated before. If the ATO want to augue that a breach has been committed because of S65(3) then you have  an "arguable case" in response and an AAT defence. This is one of the problems where the Regulator also collects the taxes…[Read more]

Hi Terry, Brett and AllThis is possible but first correct your terminology.There must be no "transfers" or "selling".The correct terms are "issue" and "redemption" of units.S 66 prohibits the "intentional acquisition" of assets by a SMSF Trustee from a member or related party.Business Real property and some other itemised assets are excluded.So…[Read more]

Hi JacM & AllYes JacM but if the parents can qualify to make super. contributions, they could proceed like this. They  have equity in the properties so they could sell some equity to the kids who can borrow and use parents property as security, It needs to be set up properly on an arms length basis. The kids can deduct the interest and the…[Read more]

Hi Swampy & AllNew reduced contribution limit for 2011/12 tax year is now $25,000 for concessional (deductible) and $150,000 for non-conceesional(non deductible). The government has announced changes that, if passed by parliament, will permanently increase the concessional contributions cap to $50,000 for individuals who have total super…[Read more]

Hi JakM and AllSorry JacM cant do: if the properties are: not commercial (Business Real Properrty) and title is in names of (parents) individuals, its prohibited by S66 of SISA.The properties must qualify as Business real property to be transferable, there is a useful ATO Ruling issued in 2009 on this subject. Self Managed Superannuation Funds…[Read more]

Hi Johnosbourne & AllWe all know that life has 2 penalties when you invest,If your venture fails you can be bankrupt,If it succeeds you pay tax, I think this is a better option, but pay the minium legally due.A much cleverer guy than me said  "Life is a cruel choice between work and daytine TV". so life is all about choice:at least your parents…[Read more]

Dear Ross and JacquiI attended a seminar in Port Macquarie a few years ago with Russ Dodson, Google him at  http://www.familyfirst.net.au.Russ is a very impressive guy who knows everything about the industry as he has sold many motels and owned and run a number as well.He can put his fingers on any detail in the industry or knows where to get it.Good…[Read more]

Hi Raydenhead and AllJust thought I would throw in my 2 cent's worth.Re: AFS licencing, I had one from 1991 to 2003, very boring occupation no wonder they all like jargon its the only way to make the time palatable. OK Raydenhead, NO you are not setting up a Managed Investment Scheme (MIS) read S708 of the Corporations Act 2001.To fit into an MIS…[Read more]

Hi Maccacha and AllThis query highlights the way most people investing behave,They take decisions and buy an investment and then try to work out the best way they might have done it !!I have seen this scenario replayed hundreds of times in the last 32 years and am constantly asked for example how to legally minimise a CGT cost when they are ready…[Read more]

Dear TerryWPlease explain in simple terms why "this is clearly incorrect".Give a clear explanation and reasons supported by any third party basis.I hav'nt got time for the next wek to go research again, my view is based on what I have done over 30+ years of study.I recognise that I am not infallable.There are a number of elements in tax…[Read more]

Hi AllThis is starting to look like Shakespears play – Much Ado About Nothing,Facts:You have traded as a company for "several months", your CGT assets (Goodwill + Business assets less stock is worth what ? Minus establsihment costs etecetara ad commissions on sale ?) This is a business Non Event guys.You could'nt get $ 100 bucks for this shebang…[Read more]