An instrument by the ATO last year means that the fund’s interest in the bare (holding) trust will not become an in-house asset merely because the loan has been repaid.  Accordingly it is no longer critical to transfer the property to the fund in order to comply with the in-house asset rules.
In light of this, many trustees decide to do nothing and leave the property in the name of the holding trustee until it is either sold to a third party or eventually transferred to the fund. However we recommend that the trust be unwound and title to the property be transferred to the fund sooner rather than later.

And this why.

Financial reasons

While keeping the property in the holding trust may seem the cheapest option, this may not remain true in the long run.  

There are ongoing costs of maintaining the holding trust and the corporate holding trustee.  For example the ASIC’s annual fee for the corporate holding trustee remains payable until the company is de-registered. The current ASIC annual fee is $246 for a standard company.  

It may also be necessary to prepare financial statements each year for the holding trust and/or the holding trustee.

There is no need to worry about stamp duty: provided the transaction was properly set up from the outset (i.e. the fund paid for all of the purchase money, including the deposit) only nominal stamp duty is payable on the transfer from the holding trustee to the fund trustee. For example, in New South Wales stamp duty is $50 and in Victoria it is exempt from duty.  

While there are other associated costs for the preparation of the necessary documentation to record the termination of the trust and implement the transaction, the long term savings are likely to outweigh these costs.

Dealing with the property  

Transferring the property to the fund means the trustee can change or improve the property or do an in-specie transfer to members more easily.


For advice regarding Self Managed Super Funds, contact us today.

This article has been reproduced from an article originally published by SUPERCentral on 21/08/15:

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