The ATO on Tue 20.11.2012, issued Taxpayer Alert TA 2012/7 warning taxpayers of certain arrangements entered into by SMSFs, to acquire property, that do not comply with superannuation law – particularly those involving limited recourse borrowing arrangements or the use of a related trust.
The ATO says it is concerned that some of these arrangements, if structured incorrectly, cannot be restructured or rectified simply and unwinding the arrangement may involve a forced sale of the asset, which could cause a substantial loss to the fund.
Among other things, the ATO says these investment arrangements may be in breach of the sole purpose test in s 62 of the SIS Act, and/or give rise to taxation and CGT consequences.
Source: ATO media release No 2012/51, 20 November 2012
[LTN 225, 20/11]