The Australian Securities Investment Commission (ASIC) has released a new report highlighting its view on the setup of SMSFs for property investments using ‘one-stop shop’ models.
‘One-stop shop models’ tend to promote the purchase of residential property through SMSF borrowing. They are usually arranged by groups of real estate agents, developers, mortgage brokers, financial advisers and so forth.
This model creates conflicts of interest that may affect the advice given to set up an SMSF. For example, these businesses take advantage of customers with limited or no knowledge of SMSFs or super and have the potential to cause major financial detriment, including:
– Receiving inappropriate or misleading advice to set up an SMSF which may result in members being financially worse off
– The obligations of a SMSF trustee are not clearly explained by the advice provider
– Members may be encouraged into a property purchase at an inflated value, or unaware of undisclosed high commissions.
The Australian Tax Office (ATO) are encouraging individuals to seek independent professional advice from a licensed adviser before establishing an SMSF and undertaking an new investment in an SMSF.
SMSF trustees who make a mistake are also encouraged to make a voluntary disclosure to the ATO. The ATO aim to help SMSF trustees in these circumstances to get their SMSF back on track.