Does any auditor know this situation in Victoria?

In NSW you are not permitted to put "as trustee" in the owners name on the title. Under the new PEXA system there is another field where this is entered but it won't show under a title search.

Hi Jean

A SMSF can borrow to purchase an asset if it follows the rules in section 67A of SIS. Section 67A of SIS requires the acquirable asset to be held on trust.

From an audit perspective my view is that SIS would have been complied with (re being held on trust) if the contract / title has the asset in the name of the custodian trustee and there is a bare / custody trust deed that states that the asset is being held in trust for the SMSF.

What needs to be included on the contract and the title re a property acquired through a LRBA depends on the state or territory that the property was purchased in. It is for this reason that my view is that legal advice should be obtained re the purchase of a property through a LRBA.

An option could be to refer to this issue in your management letter and note that legal advice should be obtained re any purchase of an asset through an LRBA. This is to ensure that the LRBA has been correctly structured so that stamp duty does not have to be paid again if the property is transferred from the custody trustee to the SMSF trustee once the loan has been repaid.

An article that goes through the state / territory issue can be found at:

www.seamless-smsf.com.au

LRBA's can be an effective investment tool in a SMSF. We answer your questions on borrowing and provide information on the ATO’s new safe harbour rules.

Thanks

SMSF AAA