|
Can an individual or company purchase a piece of land and then enter into a joint venture with the superannuation fund to develop the land?
SIS does not preclude a superannuation fund from entering into joint venture with an individual to develop a property. However, care needs to be taken to document the joint venture appropriately. This would include recording the value of each of the inputs and allocating a share of the completed asset to the fund in accordance with the assets provided by the fund.
Trustees entering into such arrangements should also consider whether such a development results in the fund operating a business and breaching section 62 of SIS. Indicators that the fund is operating a business include the GST treatment of the venture and the frequency of these transactions.
Will this change where the land is subject to a mortgage?
Yes, as you are unable to separate any building from the land itself the improved asset is subject to a mortgage and the fund has invested in a geared asset. This is in breach of SIS section 67.
|
