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Jennifer Yu

Nov 16, 2021

SMSF Property under renovation-members pay cash for renovation labour costs

in SMSF Technical Forum

Is there any regulations regarding the renovation of SMSF residential property? Is the cash payment allowed, what we need to do as a safeguard?

3 answers0 replies

Comments (3)

THE AUDITORS INSTITUTE

Nov 16, 2021

Hi Jennifer

If the amounts are immaterial then yes you could accept a minute to support the payments.

I would raise a management letter to the trustees advising that going forward all such Fund payments should be supported by an invoice.

Thanks

SMSF AAA

Jennifer Yu

Nov 16, 2021

The members said "there are no receipts for the cash payments." Would it be sufficient if the trustee has a minute to declare these cash payments?

THE AUDITORS INSTITUTE

Nov 16, 2021

Hi Jennifer

There are SIS requirements in relation to property and the improvement requirements where there is a LRBA in place. Refer section 67A(1)(a)(i) of SIS.

2 references are:

SMSF 2021/1 - Self Managed Superannuation Funds: limited recourse borrowing arrangements - application of key concepts

https://www.ato.gov.au/law/view/print?DocID=SFR/SMSFR20121/NAT/ATO/00001

www.ato.gov.au

Improvements to LRBA assets

Case study. There are several conditions trustees must comply with that determine whether improvements to a fund’s asset constitute a fundamental change to that asset. This case study covers improvements to limited recourse borrowing arrangement (LRBA) assets.

If a Fund was to make any payment for a property related expense there should be an invoice received.

Thanks

SMSF AAA