The tax office has stated an investment by an SMSF in acquiring property held in a DomaCom sub-fund would not, in its opinion, contravene the SIS Act provided the SMSF and related parties acquired less than 50 per cent of the units in the sub-fund created after a successful public book build and the property was not acquired from a related party.
“For DomaCom, now in the middle of an IPO, this is a critical opinion from the ATO. We believe it is a very significant development that will drive growth in the company. For the first time, SMSF members can use some of their super money to invest in a property jointly with their children to help them acquire a house to live in,” DomaCom chief executive Arthur Naoumidis said.
“In addition to helping their children get into property, this opinion will allow SMSF trustees flexibility in respect of their residential property investments, including allowing SMSFs to co-invest with other SMSFs to create specialist accommodation for children with disabilities or special needs.”
DomaCom said it is continuing discussions with the ATO to raise the 50 per cent limit to 100 per cent.
“The fact is most SMSFs don’t have high enough balances for that to be an issue and DomaCom believes that, if successful, the limit will be increased over time as the housing affordability issue can only get bigger. Until this process is completed, investors will need to seek specific advice or acquire further ATO advice if they want to acquire more than 50 per cent of a specific sub-fund,” Mr Naoumidis said.
“What is important at this juncture is that the government recognises that there are commercial solutions to the issue of housing funding for those looking to buy property. Unlike some overseas models, where money is released from the pension to help people acquire their first property, this Australian innovation keeps the asset within the superannuation environment.”