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 '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; and/or
• an asset specifically excluded from being an in-house asset.

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.

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Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.