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Good afternoon,
I have questions in relation to segregating an asset in a fund where there are four members and the requirements of signing documentation.
The fund currently owns a commercial property. Two of the members are wanting to buy land and then build a second commercial property on the land, within the SMSF. This will all be paid for by the two members by way of non-concessional contributions into the super fund. The property will be segregated to the two members.
From an audit point of view, there would be no issues segregating the asset?
Are all four members required to sign the building contract/legal documents? Can an updated investment strategy stipulate that the land/property being built is segregated to the two members and that just the two members are able to sign all documents relevant to the commercial property being built, or legally do all four members have to sign?
Are there any ramifications for the two members that don’t “own” the property?
Thank you.
Hi Brian
Yes if the trustee is a company then yes its Constitution and the Corporations Law would need to be followed re signing of documents.
Thanks
SMSF AAA
If the Trustee is a corporation would both the company's Constitution and Corporations Law need to be consulted as to signing documents?
Thank you so much for you response, greatly appreciated.
Hi Faye
A Fund can segregate assets from an accounting perspective but from a tax perspective it cannot be done if a member has a total superannuation balance greater than $1,700,000 and that member is in receipt of a “retirement phase” account based pension.
Whether the 4 members would be required to sign the building contracts / legal documents would be covered in my view by the Fund's trust deed rather than SIS.
Yes an updated investment strategy could be signed stating that the land / property being built is segregated to the two members and that just two members are able to sign all documents relevant to the commercial property being built (subject to the requirements of the Fund's deed).
I cannot think of any ramifications for the other member's other than by segregating assets in a Fund you are complicating the accounting and taxation of the Fund and their member balances.
Thanks
SMSF AAA