SMSF - does the security holder (bare trust) need to lodge a tax return?

[BV]

Hi Guys

When we recently did my SMSF's tax return the auditor asked my accountant to prepare a set of financials for the bare trust which seems weird to me.

Has anyone had the same experience?

I would have thought that the bare trust which is a company which isn't trading in anyway would not need to lodge a tax return.

Thanks in advance

 

[bene313]

That's an odd question from the auditor.

The bare trust shouldn't require a tax return if structured correctly, and if it did it wouldn't be a bare trust. Similarly, it is the SMSF which registers for GST not the bare trust (mainly for comm property).

 

[bene313]

BV what did your accountant say about this?

The bare trust is the legal owner of the property but has no assets, liabilities, income or expenses to disclose. The SMSF on the otherhand is the beneficial owner and recognises the asset, liability, income and expenses associated with the property.

 

[Property Hoarde]

Yeah, that auditor does not know what they are talking about.

The assets of the bare trust are shown in the Superannuation Fund as if they owned them.

No need to do financials for the bare trust.

All the auditor is required to do is get the bare trust documents and the mortgage documents and confirm they meet the requirements.

 

[BV]

BV what did your accountant say about this?.

bene
Thanks for the reply.

The accountant didn't think it requires one and I think I missunderstood
him.

I spoke to him a few minutes ago.
There is no need for a separate tax return but the auditor wouldn't give the go ahead for the lodgement of the SMSF tax return before seing the financial report of the bare trust.

Its all good now.

 

[BV]

Yeah, that auditor does not know what they are talking about.

That's the impression I got as well but I misunderstood their request
they just wanted a report and to their defense this was my first tax return with the property in it so the auditors were checking everything.

Thanks

 

[NedKelly]

I am sure the auditor and the accountant would have managed to spend the requisite time to sort it out between themselves.

The bill would be tax deductible of course.

 

[MikeF]

This has been covered previously here at SS.

http://www.somersoft.com/forums/archive/index.php/t-50399.html including ATO reference at:

http://law.ato.gov.au/atolaw/view.htm?docid=PSR/PS20002/NAT/ATO/00001

 

[Rob G.]

Apart from the fact that a bare trustee is a transparent entity for tax return purposes ...

The SMSF must account for all income and expense items relating to the asset. This is the bit that is audited.

Cheers,

Rob

 

[BV]

Thanks guys
It all makes sense now