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Mar 14, 2024

Shipping containers

in SMSF Technical Forum

I have a following situation:’

Fund purchased few shipping containers those are ready to be used as camping ground accommodation, toilets.
These containers are leased to related party Lessee who manages camping ground.

Lease Agreements are between super fund and related party lessee.

My understanding is these containers are not business real property under SMSFR 2009/1.

However, I have seen ATO examples where ATO approves related party acting as managing agent of residential properties. But in those situation Lease Agreement is not with related party though.

Is it safe to assume here, because containers are leased to related party, all containers are in breach of in-house asset S82 rules, subject to 5% threshold ?

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Mar 15, 2024

Hi SP

Yes, if the containers are leased to a related party they will be in-house assets and subject to the 5% threshold.

Business real property is defined in section 66 of SIS as:

""business real property" , in relation to an entity, means:

(a) any freehold or leasehold interest of the entity in real property; or

(b) any interest of the entity in Crown land, other than a leasehold interest, being an interest that is capable of assignment or transfer; or

(c) if another class of interest in relation to real property is prescribed by the regulations for the purposes of this paragraph--any interest belonging to that class that is held by the entity;

where the real property is used wholly and exclusively in one or more businesses (whether carried on by the entity or not), but does not include any interest held in the capacity of beneficiary of a trust estate."

A container will not be considered to be business real property.

Thanks

The Auditors Institute