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Member of the SMSF operates a scaffolding business in the mines in far North Western Australia (WA). Currently, his business incurs significant expenses on rent for FIFO (Fly-In-Fly-Out) workers who need accommodation while working. He is contemplating using his SMSF to purchase a residential property where his workers can stay.
•His SMSF would own the residential property in town. • The FIFO workers would reside in the house during their work shifts. • The scaffolding business would pay market rent to the SMSF for renting the property.
Given that this is a commercial business transaction, there is a question of whether the property could be classified as business real property, potentially aligning with superannuation rules. Do we need to consider any other compliance matter while auditing the fund.
I think that example is OK as the proeprty is being used by the business in its business activities for FIFO workers.
I have a more clear cut case where someone wants to buy a residentail house in SMSF and lease it to his mortgage broking business - my questions is shoudl they do a residential lease or commercial lease?