An SMSF can invest in property development if trustees ensure
the investment complies with the rules. And, there are a lot of rules. A key is the sole purpose test. Trustees need to ensure the fund is
maintained to provide benefits for retirement, ill health or death. Breaches of this fundamental tenet are serious and include the loss of
the fund’s concessional tax treatment and civil and criminal penalties.
By its nature property development is high risk and fund trustees need to ensure that the SMSF is not simply a handy
cash-cow for a pipe dream, particularly when the developers are related parties.
There are multiple ways an SMSF can invest in property development if the investment strategy of the fund allows:
An SMSF can purchase land from an unrelated party and develop the property in its own right. Common issues that often arise include:
If your SMSF is not undertaking a property development project in its own right, there are a few ways for an SMSF to invest in property
development projects:
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The Taxable Payments Annual Report (TPAR) is a mandatory report for Australian businesses in certain industries to disclose contractor payments to the ATO by August 28 each year, ensuring accurate tax reporting.
Starting July 1st, 2024, non-profit organisations (NFPs) in Australia with an ABN, but not recognised as charitable, must annually submit a NFP self-review return to the ATO to confirm their tax exemption status. This process involves three main sections: