Transferring a Business Property From a Related Party to a Super Fund

There are several compliance issues that need to be considered and dealt with. Please contact Supercorp before signing a contract. In addition, advice should be sought from your accountant and your solicitor.

Firstly, the property must meet the definition of “Business Real Property”. This basically requires that the property be used exclusively for business purposes at the time when the super fund acquires the property. If the property is clearly used only as business premises (factory, shop, office, etc), then that test will satisfied. The property should not have a residential component, nor should it involve vacant land. If in doubt, seek advice.

Secondly, GST may be a factor. If the seller is registered for GST, then generally the contract must include GST in the price. If the seller wishes to rely on the going concern exemption, then certain conditions must be met, including the super fund (the buyer) also being registered for GST. If the super fund is registered for GST, then GST must be added to the rent from settlement.

Thirdly, the correct names must be used for the super fund. This means that both the trustee names and the fund name must appear on the contract. If there is a company as trustee, that company name and the fund name will appear on the contract as the buyer. If there are individual trustees, all their names plus the fund name will appear on the contract as the buyer.

Fourthly, rent must flow to the super fund after settlement. This is particularly important if a related party is the tenant. Such rental arrangements are usually within the compliance guidelines but normal commercial conditions must be applied. This will include market rent, rental payments being in advance, etc.

Please ensure that copies of the contract and the settlement letter are forwarded to Supercorp.

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