SMSFs cannot acquire an asset from a ‘related party’ (such as a member or their spouse or relative) unless it is acquired at market value and is:
- a listed security (e.g., shares, units or bonds listed on an approved stock exchange);
- ‘business real property’ (broadly, land and buildings used wholly and exclusively in a business);
- an asset specifically excluded from being an in-house asset; and/or
- an ‘in-house asset’ as defined, provided the market value of the SMSF’s in-house assets does not exceed 5% of the total market value of the SMSF’s assets.
If the asset is acquired at less than market value, the difference between the market value and the amount actually paid is not considered to be a contribution. Instead, income generated by the asset will be considered ‘non-arm’s length income’ and will be taxed at the highest marginal rate.
If you have any questions about this topic, please feel free to contact us.