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Michael Kulas

Apr 26, 2022

SMSF BRP lease requirements

in SMSF Technical Forum

Hi all,

I completed a 2020 audit previously where a new lease for a commercial property (to an unrelated party) had the individual trustees as the landlord but did not mention the SMSF. I wrote in the 2020 management letter requesting that the lease be updated to include ATF SMSF as the landlord for future years. The solicitor for the SMSF has advised that this is entirely unnecessary and refuses to amend the lease but instead advised the accountants to include in the working papers provided to me a copy of the contract of sale showing the property was purchased by the trustees ATF SMSF. He has said that unless it is a contravention of SMSF legislation he will not make any changes to the lease.

Does anyone know of particular requirements/legislation so this change can be made? Must this change be made at all from a SIS point of view? I feel as though a tenant has the right to know the entity that is their landlord as a matter of disclosure but am not entirely sure of the legislative requirements.

Thank you in advance

2 answers1 reply

Comments (3)

THE AUDITORS INSTITUTE

Apr 28, 2022

Hi Michael

Thanks, I spoke to a property manager based in Victoria today & he said from a legal perspective his view is no requirement to put name of the Fund on the lease agreement. He said he normally just puts the trustee company on the lease agreement & would normally only refer to the Fund in the agreement if he has been specifically requested to do so.

Thanks

SMSF AAA

THE AUDITORS INSTITUTE

Apr 27, 2022

Hi Michael

My view is that as the Fund is the owner of the property the lease agreement should refer to the owner as XYZ Pty Ltd ATF XYZ Super Fund (as an example). There is nothing in SIS that would require the lease agreement to be prepared this way and from an audit perspective I would accept the lease agreement being just in the name of the trustee on the basis that a declaration has been obtained that the property is being held in trust by the trustee for the Fund.

It would be great to get other member's views re this issue and whether it is impacted by what state the property is in & the relevant rules for that state.

I will speak to a property manager to see if he can add anything from a lease agreement perspective.

Thanks

SMSF AAA

Michael Kulas

Apr 27, 2022

Replying to

Thanks for your perspective! I already have a declaration of trust on hand as well as the contract of sale from initial purchase. I figured it was an oversight by the solicitor potentially due to the client not explaining the situation properly which would be fixed as it is a matter of little importance. In my management letter there was no mention of any contravention, this solicitor just seems to be quite stubborn.