Longstanding Gold Coast and Canberra developer <a href="https://www.apartments.com.au/developers/morris-property-group">Morris Property Group</a> is continuing to roll on with its Glitter Strip apartment pipeline, seeking to return to Mermaid Beach with a new 68-apartment development.

Morris, founded by Barry Morris in 1978 and one of the Gold Coast’s most prolific apartment developers over the past two decades, has filed plans for a 12-storey mixed-use building at <a href="https://www.apartments.com.au/new-apartments/36-seabeach-avenue-mermaid-beach-qld-4218">34-36 Seabeach Avenue</a>, on the prized eastern side of the Gold Coast Highway.

The 1,227 sqm site occupies a prominent corner position at Seabeach Avenue and the Gold Coast Highway, opposite the Mermaid Plaza retail and office precinct and around 140 metres walking distance from the future Mermaid Beach South light rail station.

<a href="https://www.apartments.com.au/architects/fraser-partners-0">Fraser &amp; Partners</a> has designed the project, which will comprise 68 apartments across a mix of 48 two-bedroom and 20 three-bedroom residences.

The building will rise 12 storeys, reaching a maximum height of 36 metres, with the apartments accounting for a total of 156 bedrooms. The development application also seeks approval for short-term accommodation across the 68 apartments, while two office tenancies are proposed at ground level.

The plans show 108 car spaces across the development, with parking accommodated at ground level and within a three-level basement accessed from Seabeach Avenue.

<img alt="Seabeach Avenue and the Gold Coast Highway" data-entity-type="file" data-entity-uuid="c2175c99-12fd-4a3c-9be1-89bbf258a90d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-20%20at%202.59.41%E2%80%AFPM_0.png?VersionId=iNLzWcE6gaAE76rafhEXfHve.4g4Se0p" />

Resident amenity will be concentrated on level two, where Fraser &amp; Partners has designed a recreation deck with a swimming pool, 90 sqm pool terrace, outdoor barbecue area and gym.

The broader communal offering will also incorporate landscaped spaces, with the planning documents noting the amenity has been designed to provide areas for recreation, social interaction and outdoor living.

The proposal would continue the transformation of the Gold Coast Highway corridor through Mermaid Beach ahead of the arrival of the light rail.

The site is zoned Neighbourhood Centre and sits within the Mermaid Beach/Broadbeach Light Rail Corridor neighbourhood plan. While the prescribed building height is 24 metres, the site is identified within an Urban Neighbourhood context providing for a 50 per cent height uplift to 36 metres.

Planning documents describe the stretch of the Gold Coast Highway between Broadbeach and Nobby Beach as increasingly characterised by medium and high-rise development, with the proposed Morris tower joining projects including Ventura, The Alfred, Oceans and Otto.

<img alt="Seabeach Avenue and the Gold Coast Highway" data-entity-type="file" data-entity-uuid="911f193f-e381-4a55-be08-58be87fcf978" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-20%20at%202.59.48%E2%80%AFPM.png?VersionId=oxVvLJaY.SOXEdXrIcogfyEXDfvCmmpM" />

The development would mark Morris Property Group's latest investment in Mermaid Beach, where it has already delivered two apartment projects.

Otto, at 1 Bondi Avenue on the western side of the Gold Coast Highway, comprises 70 apartments across nine storeys. The project was completed in 2019 and includes a residents' gym, recreation deck and swimming pool.

Morris also developed Oceans at 46 Ocean Street, a nine-storey, 70-apartment build-to-rent development completed in 2019. Oceans was the group's first build-to-rent project and incorporates commercial space at ground level.

The two existing Morris projects sit further north along the same Gold Coast Highway corridor as the proposed Seabeach Avenue development. Fraser &amp; Partners' planning analysis specifically identifies both Otto and Oceans among the established built-form precedents surrounding the site.

<img alt="Seabeach Avenue and the Gold Coast Highway" data-entity-type="file" data-entity-uuid="14925119-7b71-4812-8149-340317512c7c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-20%20at%203.00.15%E2%80%AFPM.png?VersionId=aEJqYuw_nTCjcin17BSD0piB1EFotTlj" />

Mermaid Beach represents only part of Morris' considerable Gold Coast footprint.

The family-owned developer has been particularly active in neighbouring Broadbeach, delivering projects including Sierra Grand, Eclipse, Synergy, Qube, Koko, Opus and Malo, while its current pipeline includes Maison and the two-tower Crest development.

Further south, Morris has also developed a string of projects in Burleigh Heads, including Element, Boardwalk and Sandbar, while Essentia expanded its footprint north into Surfers Paradise.

The Seabeach Avenue application has been lodged by PMM Broadbeach Pty Ltd and seeks a development permit for a Material Change of Use for multiple dwellings, short-term accommodation and office uses. Zone Planning Group prepared the planning application, with Fraser &amp; Partners commissioned as architect.

The project comes as the developer continues to expand its Gold Coast pipeline while retaining a significant presence in Canberra. Morris now has more than $2.5 billion of development in its national pipeline and has delivered more than 7,000 homes during its near five-decade history

Joel Robinson

First look: Morris Property Group returns to Mermaid Beach with new Seabeach Avenue apartment development

<a data-saferedirecturl="https://www.google.com/url?q=https://www.apartments.com.au/developers/fortis&amp;source=gmail&amp;ust=1787272340808000&amp;usg=AOvVaw3hvFB2uWTRfEyEcpTSnnK9" href="https://www.apartments.com.au/developers/fortis" target="_blank">Fortis</a>&nbsp;is continuing its stronghold on Sydn​ey’s eastern suburbs apartment market, launching&nbsp;in September&nbsp;its latest boutique&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://www.apartments.com.au/developments/double-bay-nsw-2028&amp;source=gmail&amp;ust=1787272340808000&amp;usg=AOvVaw0GI5S9-wNeiLUnM-d1uYkw" href="https://www.apartments.com.au/developments/double-bay-nsw-2028" target="_blank">Double Bay</a>&nbsp;development,&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://www.apartments.com.au/new-apartments/55-william-double-bay-55-william-street-double-bay-nsw-2028&amp;source=gmail&amp;ust=1787272340808000&amp;usg=AOvVaw2YNouJQcFjiTTgVHbgDLA-" href="https://www.apartments.com.au/new-apartments/55-william-double-bay-55-william-street-double-bay-nsw-2028" target="_blank">55 William</a>.

55 William presents&nbsp;just eight north-facing&nbsp;two-bedroom, three-bedroom and full-floor&nbsp;residences to the market, priced from $4.5 million.

The upcoming launch comes just weeks after Fortis secured approval for the $80 million development, its third eastern suburbs approval in two months. Construction is already underway, with completion targeted for 2028.

[smartcode_project:default project_id=152579 project_image_fid=376250]

55 William adds to a growing concentration of Fortis projects in and around Double Bay, a market the developer has become increasingly active in over recent years.

Fortis previously completed the nine-residence Marmont on New South Head Road, while it is currently developing a mixed-use residential and retail project at 12 Cross Street. Its wider Double Bay footprint also extends into commercial and retail development.

The developer's broader Sydney residential pipeline is particularly concentrated across the eastern suburbs, with projects spanning Doub​le Bay, Ro​se Bay, Wo​ollahra, Dar​ling Point, Poi​nt Piper and Eli​zabeth Bay.

[smartcode_project:default project_id=152579 project_image_fid=376253]

At 55 William, Fortis has again turned to MHN Design Union, the architecture practice behind several of its eastern suburbs projects, while London-based 1508 London has been appointed to handle the interiors and Wyer &amp; Co the landscaping.

The six-level building will comprise a combination of two and three-bedroom apartments, including a garden residence, full-floor apartments, a sub-penthouse and penthouse. Each residence will have secure basement parking and private outdoor space.

A rooftop terrace for all residents, along with select apartments, enjoys views across Double Bay Harbour and toward the Sydney skyline.

Ceiling heights will reach up to three metres&nbsp;in select residences, while the kitchens will feature natural stone and integrated Gaggenau appliances.

&nbsp;

&nbsp;

The boutique nature of the project reflects the type of stock Fortis has increasingly targeted across Sydney's eastern suburbs, where larger apartments and smaller buildings are being pitched primarily toward local owner-occupiers and downsizers.

Fortis Group General Manager Ed Eve said the developer continues to see demand from buyers wanting to remain in the eastern suburbs but move into newer, lower-maintenance housing.

“We're seeing continued demand from local owner-occupiers and downsizers looking for high-quality homes that allow them to remain in the eastern suburbs, close to the lifestyle and community they know,” Eve said.

55 William is also one of the early projects to respond directly to the NSW Government's Low and Mid-Rise Housing reforms. Fortis had previously secured approval for just two townhouses on the 599 sqm site before revising the scheme to eight apartments following the planning changes.

Situated one street back from Double Bay's water's edge, the project enjoys an enviable harbourside setting within walking distance of Double Bay Village and the ferry wharf.

[smartcode_project:default project_id=152579 project_image_fid=376252]

Fortis has increasingly made the eastern suburbs a major focus of its Sydney pipeline. Beyond Double Bay, it recently completed the 14-residence Piper in Point Piper and has projects underway or planned across Rose Bay, Woollahra and Darling Point.

The developer recently secured approval for Verano in Rose Bay, a six-level development comprising 21 two, three and four-bedroom apartments, also designed by MHNDU.

55 William&nbsp;is soon to be release to the market with VIP appointments commencing early September,&nbsp;with residences priced from $4.5 million.

[smartcode_project_cta:default project_id=152579]

Fortis continues eastern suburbs push with 55 William launch

UAE-based developer Arada has unveiled plans for a $2 billion twin-tower apartment development in Broadbeach, marking its first move into Queensland as it continues its rapid expansion across Australia.

Arada will develop 952 apartments across two towers on a prominent site opposite the Gold Coast Convention and Exhibition Centre, with the project targeted for completion ahead of the Brisbane 2032 Olympic and Paralympic Games.

The project represents Arada's largest commitment to the Australian market since arriving in the country in 2024 and significantly expands a local pipeline that has now grown to eight projects and more than 5,000 homes.

It will also be the first major Queensland project delivered by Roberts Co since the tier-one contractor was acquired by Arada Group in 2025.

Plus Studio has designed the Broadbeach development, which will comprise one, two and three-bedroom apartments across two towers connected by a landscaped podium.

A significant resident amenity offering will include lagoon and lap pools, a gym, sauna and steam room, alongside a mist room, infrared room and salt scrub facilities. Communal terraces, private dining areas, a library, residents' lounge and work-from-home spaces are also planned. Around 1,200 sqm of retail and hospitality space will occupy the ground floor.

The site puts Arada in one of the Gold Coast's most active apartment markets, directly opposite the convention centre and within walking distance of Pacific Fair, The Star Gold Coast and Broadbeach's dining and retail precinct.

It also has immediate access to the Gold Coast light rail network and sits just a few blocks from the beach.

Arada Group Chief Executive Ahmed Alkhoshaibi said Broadbeach represented an opportunity for the developer to expand beyond its initial NSW pipeline.

“Broadbeach is a world-class address that gives us the canvas to create a community of exceptional design and lifestyle quality that genuinely enriches the daily lives of the people who call it home,” Alkhoshaibi said.

“This is our first development outside New South Wales, and it reflects our growing ambition to grow in key urban markets around the country.”

Alkhoshaibi said bringing Roberts Co into the project would give Arada greater control over the development and construction process.

“Delivering this project through Roberts Co, our own tier-one construction business, means we can bring the quality, pace and accountability that our buyers expect.”

The move into Broadbeach comes as Arada accelerates its Australian expansion following its entry into the market two years ago. The developer has assembled a pipeline of eight projects comprising more than 5,000 homes, while the acquisition of Roberts Co last year gave the group its own Australian construction capability.

Globally, Arada has a development portfolio valued at $50 billion comprising more than 55,000 homes across the UAE, United Kingdom and Australia.

The Gold Coast is emerging as the next major market for the developer, with strong population growth and infrastructure spending ahead of the 2032 Games continuing to underpin significant apartment development across the coastal strip.

Arada plots $2 billion Broadbeach towers in major Queensland move

Sydney’s downsizer market is changing, with a growing cohort of buyers prioritising the right home over simply finding a smaller one.

Coronation Property Head of Sales Cam Porter says the traditional idea of downsizing does not necessarily reflect what many buyers are now looking for, particularly those moving from established family homes across Sydney.

Instead, he says they are increasingly becoming “right-sizers”, seeking lower-maintenance homes without sacrificing the space, amenity or quality they have become accustomed to.

“We are increasingly seeing buyers who are not motivated by the idea of simply moving into a smaller property,” Porter says.

“They are right-sizers. They want a home that is easier to manage and better connected, but they still expect generosity, quality and a floorplan that supports the way they live.”

It is a subtle but important distinction in a market where apartment developers are increasingly targeting established owner-occupiers.

[smartcode_project:default project_id=135149 project_image_fid=377495]

For many of these buyers, moving from a house to an apartment is not driven by a desire to dramatically reduce their living space. Instead, the appeal is in removing some of the maintenance associated with a larger home while retaining generous living areas, storage and enough flexibility to accommodate family and friends.

Coronation’s sales team is seeing buyers place particular importance on natural light, practical storage and additional rooms that can be used as guest bedrooms, home offices or secondary living spaces.

Kitchens and dining areas are also playing an increasingly important role, particularly for buyers who regularly entertain or have children and grandchildren visit.

[smartcode_project:default project_id=135149 project_image_fid=377494]

“These buyers still want their home to feel generous,” Porter says.

“They may want less maintenance, but they are not looking for less life.”

The challenge for the broader housing market is providing enough of the right stock to encourage that move.

While much of the discussion around Sydney’s housing shortage has centred on the number of homes being delivered, Porter says the diversity of those homes is equally important.

Older homeowners can remain in large family houses for longer when they cannot find an appropriate alternative in the neighbourhoods where they have built their lives.

“The decision is rarely as simple as wanting fewer bedrooms,” Porter says.

“People are weighing up their connection to a neighbourhood, the space they need for family, the quality of the home and whether it will continue to work for them over the long term.”

It also has implications beyond the downsizer market. Providing suitable apartments for smaller households can free up established houses for families who need the additional bedrooms and land, creating greater movement through the housing market.

<h2>Lillian targets the next stage of apartment buyer</h2>

It is a buyer Coronation is targeting at <a href="https://www.apartments.com.au/new-apartments/lillian-erskineville-9-metters-street-erskineville-nsw-2043">Lillian</a>, its new collection of apartments, terraces and penthouses at Erskineville Village.

Designed by Silvester Fuller, Lillian has been shaped around larger living spaces, natural light and flexible floorplans, alongside landscaped areas, wellness amenity and communal spaces for residents.

The development will form part of Coronation’s broader Erskineville Village precinct, which will combine new homes with green space, retail, hospitality and new pedestrian connections.

[smartcode_project:default project_id=135149 project_image_fid=377688]

McPherson Park will sit at the centre of the precinct, creating a significant new green space alongside the project’s retail and hospitality offering.

For Porter, the opportunity is to give buyers another housing option without forcing them to leave the part of Sydney they already know.

“People should be able to change the type of home they live in without having to change their entire life,” he says.

“For many buyers, Lillian offers the opportunity to remain connected to the Inner West and the city, while gaining access to a more convenient, walkable and considered way of living.”

[smartcode_project:default project_id=135149 project_image_fid=377687]

Coronation will explore the changing <a href="https://lillianresidences.com.au/news/lillian-x-space-x-downsizers-event-27-august/">right-sizer market at an event on August 27</a>, bringing together experts across property, design and lifestyle.

Held in partnership with SPACE, Poliform and Downsizer.com.au, the event will include a property market outlook from economist Michael Blythe alongside discussion around the considerations facing buyers planning their next move.

Attendees will also be able to learn more about the residences and amenity planned at Lillian Erskineville.

[smartcode_project_cta:default project_id=135149]

From downsizing to right-sizing: What Sydney buyers want from their next home

Family-owned builder and developer <a href="https://www.apartments.com.au/developers/omaya">Omaya</a> is bringing its 27-storey The Maybelle development to market, with the 229-apartment tower rising alongside Ismay Reserve near North Strathfield.

<a href="https://www.apartments.com.au/new-apartments/the-maybelle-21-parramatta-road-homebush-nsw-2140">The Maybelle</a> will comprise one, two and three-bedroom apartments, with its height providing elevated outlooks towards the Sydney skyline and Harbour Bridge, while other residences will look across neighbouring Ismay Reserve.

Designed by <a href="https://www.apartments.com.au/architects/squillace-architects">Squillace Architects</a>, the tower combines its parkside setting with proximity to the established retail, dining and transport amenity around North Strathfield.

[smartcode_project:default project_id=134873 project_image_fid=376196]

Residences will feature open-plan living spaces and a choice of two interior schemes, while communal amenity is spread across two elevated levels of the building.

Level 8 will be home to the Garden Pavilion, a full-floor resident space incorporating communal entertaining and breakout areas, seating and recreation spaces. Further up the tower, a landscaped Sky Terrace on Level 14 will provide another communal area with panoramic views towards the Harbour Bridge and Sydney skyline.

At ground level, the development sits directly alongside Ismay Reserve, where lawns, walking paths, children's play areas, picnic spaces and recreational facilities extend the green space available immediately around the project.

[smartcode_project:default project_id=134873 project_image_fid=376194]

The Maybelle is also within walking distance of North Strathfield and the Bakehouse Quarter, which provides a mix of cafés, restaurants, shops and everyday services.

Existing rail and bus services provide connections across Sydney, while the future North Strathfield Metro and access to the M4 will add to the transport options available around the precinct. Walking and cycling routes also extend via Powells Creek towards Sydney Olympic Park and its sporting, entertainment and parkland precincts.

Families are also well positioned for access to a broad selection of established schools and education options across Strathfield and the surrounding Inner West.

[smartcode_project:default project_id=134873 project_image_fid=376181]

Omaya has operated in Sydney for more than 35 years, managing projects from acquisition and design through to construction and delivery. The family-owned company is both developer and builder of The Maybelle.

Apartments start from $560,000, with the development protected by 10-year Latent Defects Insurance.

Construction is well underway, with completion expected by the end of 2026 and move-in anticipated from Q1 2027.

[smartcode_project_cta:default project_id=134873]

The Maybelle brings 27-storey parkside tower to market near North Strathfield

Smsfs

<html><body>
SPONSORED POST
People who buy property through a self-managed superannuation fund need to consider what to do with the asset after they have retired and how to pass it on after they have passed away. 
SMSFs allow for assets to be handed from one generation to another as an inheritance, but there are regulatory constraints and taxes to take into account. 
Reserves after retirement
At retirement, an SMSF member may start a pension from their fund, in which case the balance will reduce over time. The fund may have sufficient cash flow to support pension payments but as the person ages the proportion of the fund’s balance that must be paid out as a pension increases so it becomes more likely that the property will have to be sold to support the pension. 
If the family has other sources of income, and doesn’t need to draw a pension from the SMSF, it is possible to leave the assets untouched by keeping the fund indefinitely in what’s known as the accumulation phase. 
SMSFs in accumulation phase do not issue a pension but the income and capital gains made within the fund are taxed at 15%, while they would be tax free if the SMSF was paying a pension. For some retirees, the 15% tax is still less than they would pay if they held the property in their own name so there can be advantages to holding it in the SMSF to pass on as an inheritance.
Inheritance
When an SMSF member dies, the assets held in their fund do not automatically form part of their estate. The estate can access the assets and distribute them according to the person’s will but conditions in the SMSF’s trust deed and superannuation laws must also be satisfied.
There have been cases in which surviving SMSF trustees have been able to go against the wishes of the deceased fund member. SMSF members should seek legal advice on how to avoid that risk.
SMSF members may provide their fund with a binding death benefit nomination, which gives direct instructions on who should receive the deceased member’s share of the fund’s assets but there are restrictions on who can be named as the recipient. Whether such a nomination is appropriate will depend on the fund member’s personal circumstances. 
Relationships matter
The way in which beneficiaries receive their inheritance depends on their relationship with the deceased SMSF member.
People who are in what’s classified under superannuation law as a dependent relationship with the fund member can receive their inheritance payment as a lump sum or a pension from the fund. People who are not in a dependent relationship must be paid a lump sum. 
Dependants can include a spouse, de facto or ex-spouse, as well as children who rely on the person for necessary financial support or are aged under 18 years. Other people may qualify as being dependants of the deceased but adult children typically do not.
The amount of tax each beneficiary pays on the inheritance also depends, in part, on whether or not they are a dependant of the deceased. Other factors also influence the amount of tax due, including the tax structure of the fund itself.  
In some cases, a property held through an SMSF can be passed from a deceased fund member to their beneficiaries without leaving the fund. The way the SMSF is structured affects how easy and how costly it is to do this. 
SMSFs can have up to four members. They can be established with individual trustees, where each member is also a trustee, or with a corporate trustee where each member is also a director of the trustee company. 
If the fund was established with individual trustees, the titles on the SMSF’s assets and the individual trustees must be updated when a fund member dies. State governments and any administration systems the SMSF uses may charge fees for these changes.
Funds with a corporate trustee can change their members by updating the corporate trustee’s directors. The fund must notify the Australian Securities and Investments Commission and the Australian Taxation Office of these changes but there is no change to the title of the SMSF’s assets.
Are other vehicles better?
Holding property through an SMSF is just one way to pass the asset on through the generations. Other options include owning the property directly, or through another tax structure such as a company or family trust. Each has its advantages and drawbacks. 
SMSFs can be tax effective in some situations but there may be simpler and less costly alternatives. Each family is different and what’s best will vary depending on individual circumstances. Seek professional advice. 
 
</body></html>

admin-TPy8csjoDs

Set up future generations through estate planning: Forrester Cohen

<html><body>
Guest Observer
 
One of the most disturbing aspects of the $500,000 lifetime non-concessional contribution (NCC) cap announcement in the 3 May 2016 Federal Budget is that the new lifetime NCC cap catches prior NCC’s made since 1 July 2007.
We consider the implementation of this announcement would effectively give rise to retrospective legislation for almost 9 years (ie, 1 July 2007 to 7.30pm (AEST) on 3 May 2016 is around 3,230 days or just over 8.8 years). Thus, people who have previously relied on the law during this 9 year period in making contributions to their super funds may now have no or little lifetime NCC cap left remaining.
We acknowledge that if your NCCs made during the prior 9 year period did not exceed $500,000, then there may be some remaining cap. For example, if someone had only made $10,000 of NCCs, they will have a $490,000 remaining cap.
However, if someone makes an NCC after the Budget announcement at 7.30pm on 3 May 2016, including any NCCs made in the prior 9 year period that exceeds $500,000, then their super fund must either reject any excess amount or the excess will be taxed at 49% if the member leaves the excess in their super account if possible. (There is doubt as to whether the announcement will allow the excess to remain in the superannuation fund given the little detail on this announced change).
If we trace back recent history, recent limits on making NCCs can be summarised as follows:
•        NCCs prior to 7.30 pm 9 May 2006 — unlimited;
•        NCCs from 9 May 2006 to 30 June 2007 — $1 million;
•        NCC from 1 July 2007 to 7.30 pm 3 May 2016 — $180,000 (indexed figure) per financial year or $540,000 averaged over three consecutive financial years where the member was under age 65 and was eligible to apply the bring forward rule in s 295-85(3) of the Income Tax Assessment Act 1997 (Cth) (‘ITAA 1997’); and
·                NCCs from 1 July 2007 to 7.30pm 3 May 2016 — $500,000 as reduced by any NCCs made from 1 July 2007.
As you can see, given the far more generous contribution caps applying before 4 May 2016, the $500,000 lifetime cap is a retrospective and an unfair change of law made by way of Budget announcement especially as it may not survive the political and legal process that lies ahead.
Before anyone who has made NCCs in the past 9 years makes any further contributions to superannuation, they would be well advised to request ATO confirmation of their NCCs to check whether they will exceed the new cap. The Budget Paper confirms that:
To ensure maximum effectiveness the lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007, from which time the Australian Taxation Office has reliable contributions records …
<h2>Other points on retrospective law</h2>
The Treasurer, Mr Scott Morrison, may argue that the new cap is not retrospective as it does not require NCCs that already exceed $500,000 on 3 May 2016 to be rejected and therefore prior contributions are not adversely impacted.
However, this is an argument equivalent to an argument about ‘splitting hairs’. The prior law permitted NCCs of $180,000 per financial year or $540,000 over three consecutive financial years (if the bring forward rule applied). Moreover, let’s assume that someone had contributed $540,000 of NCCs during the prior 9 years and now wishes to contribute more, they now have a nil lifetime cap. When did the current Government warn the public that the ‘rug may be pulled from underneath them?’
Indeed, the Government has repeatedly promised (particularly leading up to the 2013 election) that there would be no adverse changes in its next term of office without appropriate consultation. In particular, in January 2013, the Coalition released its pre-election policy document Real Solutions, which pledged to "deliver greater stability and certainty" around superannuation laws. "We won't move the goalposts... We will ensure that no more negative unexpected changes occur to the superannuation system," the document said.
However, following Mr Malcolm Turnbull’s appointment as Prime Minister in September 2015, he confirmed that under a Turnbull Government prior policies could be changed. “We've got to be agile all the time" Mr Turnbull told AM's Michael Brissenden on 21 September 2015.
This is despite the repeated requests for stability in respect of our superannuation law due to the ‘long-term’ nature of being locked into a regulatory environment where someone cannot withdraw their money if there is an adverse change in law.
The usual process of retrospective legislation
The Australian Law Reform Commission (‘ALRC’) report on retrospective law recognises that retrospective tax laws may be introduced, typically for tax avoidance or integrity type measures. Moreover, when retrospective tax laws are introduced, they usually only apply for a relatively short-time frame.
Also, these type of retroactive tax changes to address tax avoidance and integrity announcements should be contrasted with superannuation measures where people are ‘locked into’ a regulatory system without being able to easily withdraw their savings. Indeed, most people cannot access their superannuation until they attain age 65 (subject to strict exceptions under strict preservation rules).
The Senate has processes intended to minimise periods of retrospectivity. Standing Order 44 provides that where tax legislation has been announced by press release more than six months before the introduction of the relevant legislation into Parliament (or publication of a draft bill), that legislation will be amended to provide for a commencement date after the date of introduction (or publication).
Further, Ms Michelle Gordon, a High Court judge, commented that retrospective tax law is not only hurting taxpayers but may be making foreign investment less attractive. This comment was made during her presentation to tax experts at the University of Melbourne law school in late August 2012 when she was then a Federal Court judge.
Given that all Federal legislative processes are now in ‘care taker’ mode until after the election on 2 July 2016, there is going to be considerable uncertainty as to whether this lifetime cap announcement will become law and if it does, in what form. The Labor Government has ruled out any retrospectivity to this reform should it win the election.
More detail on the $500,000 lifetime cap
This article has put forward numerous reasons why retrospective law stretching back nearly 9 years should not be tolerated by the Australian community.
Assuming, despite these reasons, that the Government persists to introduce a $500,000 lifetime NCC cap, we note that such a cap is surprisingly low given the summary provided above where some 10 years ago, the amount of personal NCCs (then known as ‘undeducted contributions’) were unlimited in amount.
The NCC cap was then, following a brief transitional period, reduced to $150,000 (as indexed on 1 July 2014 to $180,000) per FY subject to then a $450,000 (as indexed on 1 July 2014 to $540,000) three year bring forward rule until 3 May 2016. This 10 year slide has been a major restriction on what people could previously have contributed to their super savings.
Certainly, there were numerous submissions to Government by different industry bodies and members of the community to restrict the tax concessions in relation to superannuation for those people who had attained a certain monetary threshold within the super system. However, the Government’s response overlooks the fact that these people had contributed on the basis of the law as then applying (which was unlimited prior to the budget announcement in May 2006) and as a result, the Government should not overly restrict the ability for everyone else to accumulate a reasonable amount in superannuation to provide a satisfactory lifestyle in their retirement.
Assuming the Government sees the light of day and drops the retrospective nature of the $500,000 lifetime cap, we also consider the Government has overreacted with a $500,000 lifetime cap. Such a cap does not allow any flexibility for the numerous investment timing and life cycle risks that may arise which we examine in further detail below.
What if a member suffers an investment loss?
Many who have previously contributed more than $500,000 have lost considerable value — many losing far more than 50% on their investments — as a result of the global financial crisis (‘GFC’).
A $500,000 lifetime cap provides no scope or flexibility for these people who may suffer another GFC or another market correction (as in the October 1987 share market crash), where a substantial value of their lifetime savings may be lost in volatile trading over a short-time frame.
Indeed, there are many who were hoping to retire but got GFC’d and are still in the workforce at age 65 and 70, who expected to retire much earlier.
Moreover there have been many thousands of people who have suffered from one of the many fraudulent investment schemes and who will have no chance to accumulate any further super savings as they will generally have burnt up their lifetime NCC cap but unfortunately, and through no fault of their own, have zero or next to no dollars remaining in superannuation.
SMSFs that have entered into contracts pre-budget
SMSFs that have entered into contracts and transactions to buy investments, incurring limited recourse borrowing arrangements to gear up an investment property and other investment contacts that span 7.30pm 3 May 2016, may now be in default of such contracts and stand to lose deposits and suffer considerable loss and damages as a result of the threatened retrospective impact of the new lifetime NCC cap.
So with a mere Budget announcement without any forewarning or transitioning rule, many peoples’ superannuation planning may now be in ruins by the announced change in law.
In contrast, when changes were made to restrict SMSFs investing related unit trusts on 11 August 1999, a special 10 year transitional rule was introduced to allow an SMSF that invested in a related unit trust with borrowings to invest in further units up to 30 June 2009 to enable the unit trust to reduce its debt. Without the introduction of s 71E of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘SISA’), SMSFs would have similarly been caught by an announced change but were granted a 10 year transitioning period.
The timing of the $500,000 lifetime NCC cap is particularly adverse for many SMSFs with related party LRBAs that need considerable cash flow before 30 June 2016 to place their LRBAs on arm’s length terms to comply with recent ATO guidelines. For these SMSFs to comply with the ATO’s recently released Practice Compliance Guideline PCG 2016/5, relevant SMSFs need to make the entire outstanding 2016 FY payments of principal and interest on non-arm’s length loans before 30 June 2016.
Impact on small business
The new cap is particularly unfortunate for business owners who generally are not in a financial position to contribute super throughout their lives and fall outside the CGT small business concessions in div 152 of the ITAA 1997. Many small business owners treat their business as a ‘de facto’ superannuation savings vehicle as they generally do not have enough cash to contribute to superannuation as they are building their business.
Small business owners will also have limited capacity to utilise their SMSFs from now on to acquire their business premises. The proposed lifetime NCC cap will adversely affect many small businesses, farmers and others that wish to invest in real estate, with many properties now in capital cities (and farm land on the city fringes) valued far in excess of $1 million.
Transfers from overseas to Australian superannuation funds
Those seeking to make transfers funds from foreign superannuation funds will also now be limited on what they can transfer to Australian superannuation funds.
Without the ability to transfer savings from foreign superannuation funds, many will leave their moneys in these overseas funds as the upfront tax cost on repatriation may be unviable compared to drawing a steady pension.
Australia should encourage foreign savings to be invested here, but the new lifetime cap imposes severe limits on these savings being available to produce any benefit to the Australian economy.
Conclusions
If there is to be announced legislation by budget or press release, then it should prospective. Being prospective, if the limit is $500,000 then most people will hopefully adjust and learn to live with this new limit. However, to then seek to impose a retrospective 9 year inclusion period on prior contributions when people have gone about their affairs in an ordinary and lawful manner is unreasonable and should not be tolerated by our community. Indeed, the current Government has misrepresented that there will be no adverse super changes. A change of Prime Minister in September 2015 is no excuse for such poor law making.
 
This was written by DBA Lawyers Director Daniel Butler and Special Counsel Rebecca James, who can be contacted below
Daniel Butler, Director (<a href="mailto:dbutler@dbalawyers.com.au" target="_blank">dbutler@dbalawyers.com.au</a>) 
Rebecca James, Special Counsel (<a href="mailto:rjames@dbalawyers.com.au" target="_blank">rjames@dbalawyers.com.au</a>)
 
</body></html>

j.ballantyne1990-6AQqhLzZaK

The new $500,000 lifetime contribution cap is retrospective and bad law

<html><body>
ASIC has accepted an enforceable undertaking from Ascentiv Group Pty Ltd, based in Mascot, New South Wales, and its sole director, Mr Chris Pappas.
An ASIC surveillance of Ascentiv, the holder of an Australian financial services (AFS) licence, found concerns about Ascentiv's advice to clients to establish or use a self-managed superannuation fund (SMSF).
In particular, ASIC had concerns about Ascentiv's failure to:
<ul>
<li>ensure its representatives provide SMSF advice that was appropriate and in the best interests of their clients</li>
<li>adequately manage conflicts of interest</li>
<li>adequately monitor and supervise its representatives, and</li>
<li>ensure its representatives were adequately trained and competent to provide SMSF advice.</li>
</ul>
According to ASIC, surveillance also found that Ascentiv failed to provide its clients with clear and concise statements of advice. 
"Instead the statements of advice were very lengthy and difficult to understand, making it difficult for Ascentiv's clients to make informed decisions about the advice provided to them," ASIC said.
"Under the EU, Ascentiv has agreed to cancel its AFS licence and write to some of its existing clients to inform them of the EU and the clients' rights to dispute resolution."
Mr Pappas has also undertaken to:
<ul>
<li>give a copy of the EU to any AFS licensee that authorises him to provide financial services in the future;</li>
<li>complete further SMSF specialist training before becoming a representative of an AFS licensee; and</li>
<li>refrain from becoming an AFS licensee or office holder of an AFS licensee for two years.</li>
</ul>
ASIC Deputy Chairman, Peter Kell said elf-managed super funds are not appropriate for everyone. It is important that the advice provided to clients of financial advisers is appropriate for those individuals' needs and circumstances.
'ASIC further expects that AFS licensees that provide SMSF advice to adequately monitor their representatives and have processes which lead to the provision of high quality SMSF advice," he said.
"ASIC will intervene where it finds the quality of advice provided by advisers and the supervision of those advisers by the licensee to be lacking."
ASIC acknowledges Ascentiv and Mr Pappas' cooperation throughout the process.
</body></html>

po-LsXgBTHBmX

ASIC accepts enforceable undertaking from Ascentiv Group relating to SMSF advice 

<html><body>
Commercial properties in NSW’s Port Macquarie are attracting self-managed super funds (SMSF) because of the Mid North Coast’s affordability and healthy yields.
“It’s a bit like Sydney in towns such as Port Macquarie, with SMSFs driving the sales of quality investment assets,” said Graeme Garrett, co-principal of Raine &amp; Horne Commercial Port Macquarie. 
SMSFs leasing a commercial property back to a related business is becoming a common trend in the sub-$500,000 market in Port Macquarie, added Garrett.
Several small business owners too are buying properties through SMSFs and then leasing them back to the business, which the current superannuation laws allow, he said.
In many cases, professionals such as accountants, lawyers, engineers, architects and real estate agents are buying commercial properties through a related DIY fund. Properties around the range $400,000-$500,000 are in particularly in demand.
“The trouble is that there’s a shortage of industrial stock in this price range to meet demand,” said Garrett.
Investors operating outside a super fund are also active in the Port Macquarie market because of the low interest rates and the fact that commercial properties are viewed as an investment safe haven, he added.
“Sydney investors seeking solid yields are also starting to make their presence felt in Port Macquarie.”
Yields for industrial stock priced below $500,000 range from 8%, while it’s 6.75-7% for retail and 8% for office space, according to Raine &amp; Horne Commercial Port Macquarie. 
“We auctioned a retail property to a Sydney investor, who purchased it through a self-managed super fund, and who intends on retiring to Port Macquarie down the track,” said Garrett. The property located at 5/56 Clarence Street, Port Macquarie sold under the hammer for $622,500.
Garrett said members of SMSFs would be best served considering a commercial asset that will appeal to future tenants.
“If you occupy it yourself now and then retire, you need to consider what appeal that property will have to future tenants and whether it will be easily let out if it’s part of your future retirement plans.
“Our proximity to Sydney and Newcastle is attracting investors from those cities through a combination of our healthy yields and commercial real estate affordability. 
“When you can buy two or three assets in Port Macquarie for the equivalent of a single-tenant property in Sydney, investors see this as value.”
</body></html>

prateek24-ezbwHMbNAk

DIY super funds driving Port Macquarie commercial markets: Raine & Horne

<html><body>
A recently launched investment tool is giving self-managed superannuation fund members access to invest in real property with a lower capital outlay.
The Fractional Property Investment Platform, released by DomaCom in early March, allows investors to buy shares in any property on the market through an Australian Securities and Investments Commission-registered managed investment scheme (MIS).
“We are targeting the SMSF sector because that’s the sector that we know wants to invest,” DomaCom general manager of sales and marketing Warren Gibson said.
The average SMSF balance was just over $1 million at the end of the December 2013, according to Australian Taxation Office data. The median balance for the funds is around half that figure.
Gibson told Property Observer that the high cost to buy real estate meant most SMSFs wishing to invest in the asset class had to borrow to do so or invest through a syndicate or managed fund. Funds that did not wish to borrow risked having an undiversified portfolio.
“Syndicates are costly to set up, once you are in the syndicate you are there for the duration and there’s no liquidity for the structure. What we set about doing was introducing equity market concepts into the product,” Gibson said.
Investors can choose from the 18,320 properties already been listed on the Fractional Property Investment Platform, or request that any other property for sale be included. Around 17,000 of the properties currently listed are residential, 1,000 are commercial and 300 are rural.
The company aims to increase the number of listing to around 100,000 by the end of the year and eventually have all properties for sale listed, Gibson said.
After selecting a property, the investor bids on what proportion they would like to hold and a price range they believe it is worth.
The platform allows them to create a book build to buy the property with other investors who also wish to purchase a stake. When enough investors have joined the book build to account for the expected full value, DomaCom engages a buyers’ agent to acquire the property. Property valuers and conveyancers are also engaged.
After purchase, the property is placed into an MIS with sub-accounts set up for each investor. Rent and property-related costs are allocated to each investor in proportion to their holding.
The minimum amount to open an account is $20,000 but investors can put as little as $2,000 into each property.
Management fees to DomaCom are around 1% a year.
Gibson said the DomaCom platform also offered a secondary market where investors could sell their holdings in the MIS to others.
Investors can only access the structure through financial planners, who must be accredited to advise on the products.
DomaCom is also working on a product that will allow home owners to sell part of the equity in their property to investors. Gibson said the company hoped to release that product in the third quarter of this calendar year. 
</body></html>

zfielding-GvX3Uq9KTa

New tool allows SMSFs to buy shares in properties

<html><body>
GUEST OBSERVATION
Self-managed superannuation funds (SMSFs) are the fastest growing sector of the superannuation industry, <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/SMSF/Self-managed-super-funds--A-statistical-overview-2010-11/?page=4#Growth_of_SMSF_sector" target="_blank">spiking</a> by 33% between 2008 and 2012, putting them in the sights of both the super industry and the Australian Taxation Office.
From July the ATO will be able to levy individual <a href="https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/SMSF-News/SMSF-News---edition-29/?page=2#Be_prepared_for_new_penalty_powers">fines</a> of up to A$10,200 on fund trustees who breach superannuation law, a step up from the previous environment where breaches could only result in making a fund “non-compliant”, or a referral to a court for penalties.
But many superannuation industry representatives want more regulation of self-managed super funds, with calls to the current financial system inquiry ranging from <a href="https://www.propertyobserver.com.au/https://www.financialstandard.com.au/news/view/39283887" target="_blank">regulating the funds as a financial product</a>, to <a href="https://www.propertyobserver.com.au/https://www.financialstandard.com.au/news/view/39104282">forcing</a> fund trustees to use a financial planner when the fund borrows money to invest in property.
The current benefits of SMSFs
SMSFs are perceived as giving tax advantages to their members, but they are taxed at the same (concessional) rates as other superannuation funds, and must comply with similar regulatory requirements: the main technical differences are in the administration of the fund, and the control that the member/trustees of an SMSF have in devising an investment strategy. The tax advantages that members of SMSFs do obtain are largely through the characteristics of the structure and the profile of SMSF members.
However there are some regulations that apply specifically to SMSFs; and others that in practice are more relevant to SMSFs than other types of superannuation funds.
A SMSF is a superannuation fund that has fewer than five members, and these members are also the <a href="https://www.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s17a" target="_blank">trustees</a> of the fund. This gives the member/trustees the flexibility to devise and control an investment strategy that meets the needs of its members, as required.
One of the key reasons that many members of SMSFs give for choosing an SMSF as an investment vehicle is the level of control it gives them over their investments. However this places a high level of obligation on the trustees, and also exposes the members of the SMSF to risk which the trustees must manage.
SMSFs are not eligible for financial assistance where the fund has suffered loss due to fraud or theft, and do not have access to the Superannuation Complaints Tribunal to resolve disputes.
Funds must already pass the sole purpose test
All superannuation funds are required to meet the sole purpose test, which requires that the purpose of a superannuation fund must be to provide benefits to members in retirement and, in the event of their death, their dependants.
The regulatory framework for all superannuation funds is designed to support this core purpose, but SMSFs are particularly impacted: for example the law prohibits a fund from intentionally acquiring an asset from a related party, or loans or other financial assistance to the members of a fund.
But there is room for bias…
There are long-standing exclusions from the non arms-length rules that allow a SMSF to pay market value to purchase business real property from or lease it to a related party. This allows a person establishing a SMSF to transfer business premises to their superannuation fund and lease the property back from the superannuation fund, a strategy frequently used by business owners to provide an income stream to the fund.
One of the issues around SMSFs is ensuring that the trustee/members properly recognise the separation of superannuation assets from assets that are personally owned and controlled, and the regulations are designed to preserve that separation of assets. For example, from 2011 investments by SMSFs in certain collectibles, including artwork, wine, antiques or memorabilia were subject to regulations regarding these investments that regulate the use of certain collectible assets by members so that they cannot be used by or stored in a member’s residence.
The other exclusion that has gained much coverage during the recent property boom is the rule which overrides the prohibition on borrowing. In principle the trustees of a superannuation fund are not permitted to place members’ retirement funds at risk, thus the power to borrow is restricted. This restriction was eased in 2010 to allow borrowing by any regulated superannuation fund where the borrowing is linked to a specific asset. The provision is particularly relevant to SMSFs due to the structures used to comply with the requirements and the relative scale of the funds held by SMSFs.
This is where the flexibility and investment strategies of SMSFs become relevant. If the members have a bias toward investing in real property, then they may devise an investment strategy incorporating borrowings; whereas other investments with lower capital requirements, such as property trusts, could be funded without borrowing.
However the biggest tax advantage that SMSF members obtain flows from the profile of the SMSF investor. Members of SMSFs typically have <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/SMSF/Self-managed-super-funds--A-statistical-overview-2010-11/?page=39#Table_11__SMSF_member_age__balances_and_taxable_income__contrasting_with_non_SMSF_member_taxable_income" target="_blank">higher income levels</a> than members of other superannuation funds across all age groups, and their account balances are correspondingly higher. Further, the nature of the fund makes it attractive to investors who take an active interest in their superannuation strategies, despite the risks.
In the meantime the rapid growth in the sector, combined with the level of control that trustees have over the assets of the fund, raises the risk that trustees will make poor decisions: either through not being sufficiently informed in respect of an investment or through pushing the boundaries of the SMSF structure.
There seems to be something inconsistent in a system that mandates savings but then allows those savings to be put at risk through insufficient regulation. It is time for the sector to be examined more closely.
HELEN HODGSON is senior lecturer at the School of Tax and Business Law at the <a href="https://www.unsw.edu.au/" target="_blank">University of New South Wales</a>.
Helen is a member of SPAA.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
</body></html>

hhodgson-WTYf8w7F7q

Taxing times for self-managed super funds

<html><body>
Property promoters recommending self-managed super funds (SMSFs) borrow and invest in property must be careful not to break the law, the Australian Securities and Investment Commission commissioner, Greg ­Tanzer has warned.
ASIC said it was investigating ­SMSF seminars for evidence of misleading and deceptive conduct.
ASIC was also warning of unlicensed ­financial services conduct following a rise in promoters urging investors set up or use an existing fund to invest in property.
“These promoters may not be ­complying with the law,” Greg Tanzer said in a speech to the annual CPA Australia Self-Managed Super Fund Conference entitled,The regulator’s perspective on the regulation of SMSFs.
He referred to ASIC’s SMSF task force which is examining "high-risk" SMSF issues making specific note of the Charterhill group collapse earlier this year.
"It operated as a ‘one-stop shop’, providing advice to clients on the establishment of SMSFs, rollover of existing superannuation funds into an SMSF, sourcing and purchase of investment properties, property management, insurance and taxation services. 
"This raised a number of questions about operators using this business model," Greg Tanzer advised.
He said the ASIC taskforce appointed a small project team to explore the trend of ‘one-stop shop’ operators offering a range of services to SMSFs. 
"The purpose of the project team is to investigate the (often complex) business model structures of these operators and the risks to investors that this trend poses. 
"So far the project team have identified that a feature of these business models is a ‘one size fits all’ approach where all investors who use their multiple services receive the same suite of products and services – that is, they end up with an SMSF, a property investment and a limited-recourse borrowing arrangement."
The project team is also exploring whether commissions are being paid within these business models and whether these commissions are consistent with the restrictions on payment of commissions for advice under the FOFA reforms. 
Under the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 introduced on 19 March 2014, some forms of commission that were originally banned under FOFA will be reintroduced. 
Tanzer added it was worth noting that where commissions are permitted, they must still be clearly disclosed to retail clients. 
The Association of Superannuation Funds of Australia supported moves to stop any risky borrowing by funds.
Recent figures from the Tax Office show funds with borrowings had tripled over the past four years.
The average loan size has doubled to $357,000 with commercial and residential property holdings now comprising more than 15% of total assets held by the $1.6 trillion self-managed super sector.
Property ranks as the third-largest allocation after cash and listed shares.
Greg Tanzer noted section 911A of the Corporations Act requires any person carrying on a financial services business in Australia to hold an AFS licence or be a representative of an AFS licensee.
A person provides a financial service if they provide financial product advice. 
Financial product advice is defined as a recommendation, a statement of opinion or a report of either of those things that is, or could reasonably be regarded as being, intended to influence a person’s decision in relation to a financial product. 
Providing financial product advice includes making a recommendation or a statement of opinion to a person to set up an SMSF or use an existing SMSF to purchase property through that SMSF. 
ASIC is concerned that, with the increased popularity of SMSFs and property investment, real estate agents and property advisers may not realise that they may be carrying on a business of providing financial product advice and may need an AFS licence, or authorisation under an AFS licence, when making recommendations or statements of opinion to a person to use an SMSF to invest in property. 
Where an AFS licence is required, unlicensed entities must immediately cease offering and providing financial services or advertising the provision of financial services until such time as an AFS licence is obtained or they become a representative of an AFS licence holder. 
A person convicted of carrying on an unlicensed financial services business may be subject to a fine of up to $34,000 or imprisonment for two years or both. If a company is convicted it may also be liable to penalties, including a fine of up to $170,000.
</body></html>

jchancellor-FAypfDUnLy

Charterhill collapse prompts warning for SMSF property promoters: ASIC

<html><body>
The SMSF Professionals’ Association of Australia has developed best practice guidelines for self-managed super fund limited recourse borrowing arrangements (LRBA).
This week SPAA announced NAB has agreed to adhere to the two separate guidelines.
NAB is the first lender to sign up to the guidelines for <a href="https://www.smartcompany.com.au/finance/superannuation/22072-20110922-borrowing-smsf-cash-for-property-repairs-the-do-s-and-don-ts" target="_blank">LRBA</a> with the SPAA saying sign up from the other major banks is in progress.
Andrea Slattery, chief executive of the SPAA, said in a statement the association has been “very conscious” of concerns expressed about LRBAs and in particular about a “tiny rogue minority” spruiking this borrowing facility.
“We believe that by publishing these guidelines, and with NAB signing on and other major lenders in the pipeline (the major banks are estimated to have more than 85% of this market), the government and regulators can have a high degree of confidence that LRBAs are being used appropriately and that the industry has best practice guidelines for lending and advice in place,” she says. 
The two guidelines are LRBA lenders’ best practice guidelines and LRBA advice best practice guidelines.
Slattery says adherence to the guidelines by the banking and financial advice industry will ensure LRBAs are being used appropriately by SMSF trustees, and encourages self-regulation in the SMSF lending sector by lenders and advisers.
Jeff Bresnahan, chairman of SuperRatings, told SmartCompany there is a need for restrictions like this in the SMSF sector. 
“If SMSFs are going to come under scrutiny and there is going to be failures, there is a high chance it will be in the property area. There will always be the temptation for unscrupulous behavior in that sector,” he says.   
“The property spruikers are back and are targeting SMSF members so these guidelines can offer protection.”
Bresnahan says he is not concerned that some SMSFs may miss out on loans under the guidelines. 
“If the guidelines are well thought out then there should be an appropriate level of gearing, if people miss out because they were going to do something highly leveraged then that is not a bad thing,” he says.
“That is a positive move to protect people.”
Bresnahan warns the industry, valued at half a trillion dollars, has its risks.
“SMSFs are great for a lot of Australians, but there are a lot of SMSFs out there that have been sold probably inappropriately to people who should not have them and they have to be protected from their own greed and lack of financial literacy,” he says.    
Bresnahan says in mainstream super funds investors are protected by the Australian Prudential Regulation Authority in the event of default but SMSFs don’t have that protection.
“The more restrictions that are put in place the better I believe,” he says.
This article first appeared on <a href="https://www.SmartCompany.com.au" target="_blank">SmartCompany</a>.
</body></html>

cwaters-YrtBR88nBe

Banks to impose restrictions on SMSF borrowing

<html><body>
GUEST OBSERVATION
Those of us in the SMSF sector who hoped that property spruikers would be driven out of the industry, and thankfully it’s the vast majority, have been sorely disappointed.
When the spruikers first realised that the combination of leverage and SMSFs were an ideal vehicle for pushing residential sales in a bullish property market, irrespective of the merits of the asset or how it fitted into a trustee’s portfolio, the anticipation was that the regulators would step in and end this questionable behaviour.
I am the first to admit the regulators have issued warning after warning about the practice, and the media has given it wide coverage, but it has had little or no effect. There still seems to be more spruikers than you find at a country fair.
I have had my own first-hand experience dealing with spruikers several years ago when I was asked to assist a Gold Coast property group with a series of workshops where my role was to explain the compliance requirements in running an SMSF.
That was my specific brief – trustee education. But it soon became evident that was not what the property group had in mind. They were there to sell property, by fair means or foul, to the trustees, with my role to give the sordid little sales pitch a semblance of respectability as an SMSF specialist. The moment I saw there were no qualified financial planners there to give holistic advice on any purchase, I realised our values were not aligned and took my leave. But not before giving the organisers a piece of my mind!
It is practices such as this that are bringing into question the legitimacy of SMSFs to use leverage – limited recourse borrowing arrangements (LRBAs) to be technical – as part of their investment strategy. There is no better evidence of this than the fact the Financial System Inquiry has firmly put it on the agenda in its draft report by posing the following policy option – “restore the general prohibition on direct leverage of superannuation funds on a prospective basis” – for further discussion. In the view of many in the industry, a ban on leverage is a lay-down misère. 
In my opinion leverage does have a role to play in an SMSF. Considering less than 1% of assets in their portfolios are LRBAs, it’s hard to argue that trustees have been borrowing with their ears pinned back, although their use is undoubtedly increasing.
What needs to happen is for lenders to get a statement of advice about using a LRBA, or, at the very least, some evidence that they have sought appropriate financial advice before pursuing this strategy.
There are any number of items trustees need to consider, such as anticipated time to retirement, fund liquidity and the ability for the fund to pay a pension to its members, and life insurance – so that the fund can pay out death benefit payments without the need to sell the property.
LRBAs are complicated investments and need to be treated with caution. As a rule of thumb, recognising there can and will be exceptions, it’s not a strategy I endorse for those in the pension phase when the name of the game for most trustees is capital preservation.
Like everyone else in the industry I will be waiting with bated breath to see what the FSI recommends. Even if it does suggest an outright ban, the final decision will rest with the federal government that promised no adverse changes to superannuation in this parliamentary term.
Whatever the outcome, what remains deeply frustrating for all professional advisors is how a rogue minority continues to wag the industry’s tail on this issue.
Olivia Long is CEO of <a href="https://www.superguardian.com.au/" target="_blank">SuperGuardian</a> and <a href="https://www.xpresssuper.com.au/" target="_blank">Xpress Super</a>.
</body></html>

olong-z8Vwz6ke9t

Property spruikers cast a long shadow over the SMSF industry

<html><body>
Savills have advised clients on what they see as the four advantages of utilising SMSF for direct commercial property investment, in preference to other asset classes.
<ol>
<li>Commercial property is one of the few assets that can be bought by an SMSF from its members. Your SMSF can potentially buy your own business premises and then you can pay rent to your SMSF. A residential property, on the other hand, cannot be lived in by a fund member or any fund members’ related parties, nor can it be rented by a fund member of any fund members’ related parties.  </li>
<li>
The MoneySmart website details the strict rules against using borrowed funds to make improvements to residential property that forms an asset in your SMSF portfolio, so don’t even think about buying a renovators’ delight. This can severely limit potential capital gains as you cannot renovate it to increase its value. In contrast, an investment such as a bulk storage unit or warehouse has very low capital expenditure requirements. 
</li>
<li>Commercial leases are typically for a longer period than residential leases – usually around five years with a further option for another five years with incremental rental increases built into the lease. If you choose the right property and tenants with stable businesses which are unlikely to be adversely affected by an economic downturn you won’t have to deal with a regular turnover of tenants and can rely on a steady rental return.  </li>
<li>Many industrial properties are purely functional in design and construction, so there is less concern about tenants maintaining them or investors having to pay for costly renovations, which is often the case with residential property investments. That said, it’s important to ensure any essential, expensive upgrades, such as those required to meet new fire safety or health and safety standards, have already been carried out before investing in a commercial premise.</li>
</ol>
Visit the <a href="https://www.asic.gov.au/" target="_blank" title="Australian Securities and Investments Commission ASIC">Australian Securities and Investments Commission (ASIC)</a> website to familiarise yourself thoroughly with all the rules and regulations surrounding SMSFs and property investment.
</body></html>

Smsfs

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Smsfs

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News