SMSF & construction fees question

[urban cowboy]

not sure if this is in the right area, but anyway...

does anyone understand the ins and outs of SMSF and construction etc??

if one was to go and purchase a block of land under the SMSF and arrange construction finance through the same SMSF...

can a person then act as a project manager or even owner builder either personally or under a company structure and invoice the super fund for project management fees??

 

[jrc]

Normally a trustee should act gratuitously.

Does the trust deed let you?

What about the sole purpose test? http://www.ato.gov.au/content/downloads/spr46427n11032.pdf se contravening the sole purpose test on page 14

A survey by the ATO showed "30 per cent of new SMSF trustees could not explain the sole purpose test, according to a survey by the Australian Taxation Office." You need to make sure you understand it or you have the potential of draconian penalties.

 

[BV]

can a person then act as a project manager or even owner builder either personally or under a company structure and invoice the super fund for project management fees??

You cannot get paid as a trustee.
Also, you've got to be careful who you use as a project manager because of the non arms length rule.
If related parties do the management or do the actual building work and get paid this could be deemed non-arm's length dealing.

 

[handyandy]

Company structure might work as it will be a separate company invoicing the SMSF.

I do think you need to be careful as you don't want to loose your super fund status.

Maybe a visit to an accountant is appropriate.

Cheers

 

[grossreal]

hi urban cowboy
a smsf needs to have in it enough capital for it to be a smsf
and if so needs to have an accountant that does smsf's
now alot of accountant understand the rules but are not that great with investing with smsf into property
and having said that they are even less that do investing and constructing using smsf's
when going into constructing buying off the plan or delayed purchasing thru smsf this is a very specialist area and is a real land mine field.
most accountant thats I talk to just
a don't understand
b its just to hard
c the cost to do in there time is just not worth it.
there are alot that do do warrants and do smsf investing into developing but its not.
buy the block of land and build in my smsf
simple as it might seem doesn't work that way
as is the case with most things I find it comes down to the structure
and that structure is made up of alot of associated parts that come together to make the development work.
and I think you will see this question come up more often as people try to use the smsf to leverage into property.
so in answer to your question does anyone know or understand developing with smsf
the answer is yes very much so
as for the fees the answer is no unless the structure right and the cost of that structure would not make the development worth while in my view.
as you need to setup the end entity that will hold the assett.
and this in itself is a micro part of the original structure.
the days of a smsf is just an account you open and use as you wish are long time gone
smsf investing is very much a growth area in property developing and some thing that maywell be some thing we should think of doing a seminar at say a somersoft sydney meeting might ask perky
hope this helps
add ....'''where needed

 

[urban cowboy]

thanks guys - appreciate it...

I am fairly new to the SMSF game and trying to figure it all out...

Nommy - I believe you can purchase as a house and land package and get around the progressive payment issue that way - happy to stand corrected though - my Fin Planner pushes packages to SMSF's on a 60% lend so there is obviously a way to fund it.


I need to set up another company anyway, could i set it up entirely in my wife's name and have that company do the project??

Accountant is certainly on my list, but I thought i'd see who might know here so I can go foerarmed with knowledge as opposed to being charged my right arm for an idiots guide to SMSF!

 

[grossreal]

hi
you will lose more then that arm if setup wrong from the start.
smsf is a bit of a buzz word at the moment similar to the dot com and buying into mezz funding and you know where that went.
you will see lots of invest in this with your smsf
or come to us and we will setup a smsf and then invest.
all of these I would read my post again is a mined field
and step on one and you will lose more then your are.
yes alot have pds and etc but so did the dot com and mezz funders
if you catch a wave make sure your on a board and not in the air because when those wave crash make sure you are on a board to come out on the other side.
the smsf market I think was at 3 b at last count.
and has been sat there doing very little except shares
that is building at 18% p/a 9% employees 9% employer
and has to go some where.
so alot of people are going to be asking should I invest in this using a smsf
no advice is be very carefulas rule can change very quickly and smsf for me need to very well organised from the start

 

[urban cowboy]

thanks GR...always appreciate your input!!

fortunately - I am dumb enough not to understand 80% of all the stuff that is pushed around these days and smart enough not to touch anything i don't understand...

I missed your first post - must have been typing at the time - you highlight some good issues. I am lucky enough I guess to have both an accountant and financial planner who are very good with structures and SMSF stuff...and both of them very much believe in property investing and development. The planner in particular is very clever and is on top of many of the issues you raise - I guess that is why we pay him.

what gets me is, as you say, it is a bit of a buzz at the moment - why are so many people jumping in without the correct advice??

 

[grossreal]

simple answer
smsf
as the name say's its self managed
so when you manage it yourself you see that you have to buy some thing.
shares for get it
mutual fund nope
what about some of the property trust thats a bit of a laugh
deposit in a bank or something like a deposit
or direct invest
thats why its so popular
with a smsf unlike other types of investing you have to invest and invest in some thing.
now for some one on say 30k thats not a big problem but for some one on say 300k or a company with 10 people on 300k thats alot of money that you have to invest 18% of it
so thats why itsa buzz at the moment
add to that
that alot of financial planners have their problems with litigation and so on
the smsf has alot of people trying to invest on there own
and that make for interesting times
thats just my thoughts and not advice