Date posted: 11/04/2018 5 min read

Lack of fund documentation undoes yet another SMSF

Transfer of property incurs Victorian stamp duty

In brief

  • Transfer of property should have been exempt from stamp duty
  • SMSF did not have relevant fund documentation to back up claims
  • Review of Victorian revenue office failed

Earlier this week the Victorian Civil and Administrative Tribunal determined that a transfer of real estate to a SMSF was subject to stamp duty on the transfer of commercial property.

The duty was payable despite the potential for the transfer to be exempt under either Sections 36B and 41 of the Victorian Duties Act 2000.

The applicant in the case was the corporate trustee of a unit trust.  The sole unitholder was a related SMSF.

The following points are relevant from the judgement in relation to the Sec 36B concession (I have bolded relevant points):

  • “it is clear on the evidence that has been presented to me from the documents, that Vito and Nazz held their interest in the property in a personal capacity. To find otherwise, would fly in the face of what the documents in fact say.” (emphasis added)
  • “The next matter that should be considered is whether the applicant was trustee of the Super Fund at the time it took the transfer of the property. The Second Transfer was from Vito, Nazz, Francesco and Anna Maria to the applicant. However, there is no contemporaneous evidence that the applicant was the trustee of the Fund.
  • I have already made findings that … it is not probable that as at the date of the purchase of the property, the Super Fund Deed had been amended. I mention in addition Clause 5 of the Deed which I have referred to above, which requires that for the appointment of a Company as a Trustee it and its directors must have agreed to its appointment by signing the Super Fund Trust Deed (cl 5.2(a)); and its directors must have read and understood the PDS and must have agreed to be bound by the rules of the Fund (cl 5.2(d)). There is no evidence of these matters.
  • if the trustee of a self-managed Super Fund is a body corporate each member of the Fund is a director of that body corporate. In this particular instance, if Vito, Sophie and Lara were members of the Super Fund they would have been appointed directors of the applicant but they had not been.
  • I am not able to infer, that the funds from Sophie and Lara, were used to purchase that property. That would be flying in the face of the strong documentary evidence to me that suggests the contrary. If Sophie and Lara were members of the Fund prior to the purchase of the property one has to ask the rhetorical question “why was not the same documented?” It clearly was not.

The Tribunal found that the SMSF failed the Sec 41 concession because there had been a change in beneficial ownership of the property when it was transferred.

Case name

Citera Investments Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2018 VCAT 519

You can read the case here

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