ATO draft ruling 'practical'
The Institute of Chartered Accountants has welcomed as "a more practical interpretation" the Australian Taxation Office's (ATO) draft ruling on self managed superannuation funds (SMSFs) borrowing to invest in real estate.
Commenting on the ATO draft ruling, the institute's head of superannuation, Liz Westover said the draft contained a more practical interpretation of the rules surrounding limited recourse borrowing arrangements to invest in real estate.
"Trustees of SMSFs borrowing to invest in 'real property' will be able to proceed with a more reasonable approach by the ATO as to what constitutes a 'single acquirable asset' and will now have some capacity to improve their property," she said.
Westover said that previously the rules relating to the arrangements had meant owners were limited in funding improvements. The shortcomings of the situation were highlighted when many properties were damaged by the Queensland floods but SMSF investors were unable to rebuild these properties with proceeds from insurance without breaching the borrowing rules.
Westover said the institute, alongside many stakeholders in the SMSF industry, had been working with the ATO for over 12 months to progress through the limited recourse borrowing arrangements legislation.
"Fortunately, it appears they (the ATO) have listened to our input," she said.
She said the ATO's new approach factored in the realities of investing in real estate, particularly the ability to make improvements.
AUTHOR
Mike Taylor
Recommended for you
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
Iress has appointed Insignia Financial’s former general manager of master trust and insurance products as its newest CEO of superannuation, who will take over from Paul Giles.
