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Peter

Oct 19, 2021

In specie property acquisition

in SMSF Technical Forum

A fund has acquired a property from a related discretionary trust. The asset is business real property and had a market value of $2.2m at the date of transfer. $1m was paid by the fund and $1.2m considered non-concessional contributions (allocated $300k to each of the 4 members) as a result of an in specie transfer. The trustees have provided a contract of sale detailing a sale price of $1m.

Should the contract of sale reflect the entire market value of the property despite only $1m being paid?

What are the implications of transferring an asset from a related discretionary trust? and what audit issues may result?

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Peter

Nov 16, 2021

Further information was provided by the trustees which resolved the queries regarding the property acquisition.

The acquisition occurred in 2 events. The trust distributed 12/22 shares in the property equally among the beneficiaries (3 shares each) which were than contributed in-specie. The fund then purchased the remaining 10/22 shares in the property from the trust. This was shown through the contract of sale.