Property & SMSF & related party
Question 3.10.2011 – Do i pay tax on the transfer of my property to my SMSF?
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Mr A, in WA, owns a business which occupies a commercial premises
Mrs A , in WA, owns a principal place of residence and the commercial premises. Mrs A has one mortgage against the home, the funds were used for purposes of purchasing the commercial premises. The commercial premises is unencumbered.
Do we pay tax if Mrs A sell’s the commercial property to a SMSF of Mr & Mrs A?
ANSWER (03.10.11)
Two potential taxes apply, capital gains tax and Duty (previously stamp duty). Capital Gains tax does apply, however note the 50% potential CGT exemption if it applies to you. WA Duty does apply in full, however you could eliminate the Duty if only Mrs A was a member of the SMSF. See S122, s123 and s124 for relevant sections of the 2008 Duties Act.
SUBSEQUENT QUESTION
If the SMSF only purchased a 50% tenants in common interest from the sole SMSF member who is also the owner of the property, is Duty payable and would it be payable when the SMSF purchases the remaining 50%?
There is nothing in the Duties act for this specific situation, so in the absence of any other authority on the matter, we would conclude that the duty exemption would continue to apply, and be DUTY FREE and that a later transfer of the remaining 50% of the commercial premises to the SMSF would also be DUTY FREE.