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Sandeep Dheer

May 23, 2024

Residential Property transferred in specie to member

in SMSF Technical Forum

I was engaged in audit of SMSF for FY24 (wind up) with 2 members (M1 age-61 and M2 age 62). During the financial year 24 trustee started the pension for both members and provided declaration that trustees retired from work force to satisfy condition of release. Minimum pension as per guidelines was paid from the SMSF bank account. Trustees transferred residential property (in specie) to one of the member (at the market value - valuation report and sale of contract was provided). The proceeds from the sale was not received in the SMSF account rather they recorded it as Lump sum payment to members. Stamp duty on the transfer of the property was paid by SMSF and adjusted it as pension payment by the accountant (arguing that the all the personal expenses paid from the super fund (stamp duty) in this case can be classified as pension. Could you please advise on the following :

a) Can declaration of retirement be taken as sufficient evidence to satisfy condition of release

b) Is the adjustment of lump sum payment to the member instead of receiving the money in SMSF bank account is ok

c) Whether stamp duty paid from SMSF can be adjusted as pension payment

Regards

1 comment

Comments (1)

THE AUDITORS INSTITUTE

May 23, 2024

Hi Sandeep

Thanks.

Yes a condition of release includes turning 60 (& under 65) and leaving an employment arrangement or permanently retiring. Yes if you get a declaration that confirms the condition of release has been met that would be sufficient for audit purposes that a benefit can be paid to them.

Yes if the property is transferred to the member this can be allocated to them as a lump sum benefit. That is money does not need to be received for the property.

Re the stamp duty my view is that stamp duty should have been payable by the member that was receiving the property rather being payable by the Fund. That is stamp duty would not have been able to be treated as a pension payment as it was not an expense payable by the Fund. Stamp duty is normally an expense that is payable by the "purchaser" of the property and not the "seller" of the property.

If other forum members have a view on this query especially re the stamp duty query please let the forum know

Thanks

The Auditors Institute