ASIC sounds new warning on SMSF spruikers
The corporate regulator has issued a warning about SMSF spruikers who are encouraging consumers to invest in residential property via the National Rental Affordability Scheme (NRAS).
“ASIC is aware that a number of SMSF promoters include misleading statements in their ads about the grants that may be available under NRAS,” said the regulator.
The NRAS offers property investors direct payments and tax offsets for building and leasing to moderate income earners at a rate that is 20 per cent below market value.
“ASIC has seen ads stating that consumers can use their superannuation to purchase a property using the scheme and receive ‘$100,000 tax free’,” said the statement.
The regulator said the advertisements do not provide balanced messages about the “features, benefits and risks” of investing in an NRAS property via an SMSF.
The advertisements fail to mention that the eligibility to participate in the scheme is subject to restrictions; there are fees associated with purchasing, tenanting and managing NRAS properties; to receive a total financial incentive of $100,000 consumers need to remain in the scheme for 10 years; consumers will be required to rent out the property at 20 per cent below market value to eligible tenants, said the Australian Securities and Investments Commission (ASIC).
The regulator noted that if consumers purchase an NRAS property through an ‘approved participant’ there is no requirement for the incentives to be passed on.
In addition, any contractual arrangements should be checked to ensure the relevant NRAS-approved participant will comply with all legislative requirements, said ASIC.
ASIC commissioner Greg Tanzer said consumers need to be cautious when approached with an offer that appears too good to be true.
“ASIC is focused on protecting consumers and where we see people recommending consumers invest using their SMSF, we want to ensure they are providing balanced messages that comply with the law,” he said.
“It is important that ads are clear, accurate and balanced, especially when consumers are looking for investments for their long-term retirement,” said Mr Tanzer.
