SMSF property spruikers receive ASIC warning

Property spruikers have been warned they must be licensed to offer financial advice if they are targeting people with self-managed superannuation funds or suggesting people should establish their own funds to buy real estate.

People who advise on direct property do not need to have an Australian Financial Services Licence, but people who make recommendations that involve SMSFs do need a licence as superannuation funds are considered financial products, Australian Securities and Investments Commission commissioner Greg Tanzer said.

“We regard [recommendations to buy property through SMSFs] as investment advice and you need to be licensed and if you are not licensed we will come after you,” Tanzer said.

Tanzer warned investors to be wary of property spruikers and ensure any advice they took was right for their circumstances.

“Our message for investors is superannuation is a far too important investment in the future to be taken in by a glitzy promotion,” he said.

The Australian Taxation Office, which regulates SMSFs, was also monitoring property transactions through the funds.

Acting second commissioner Alison Lendon said the ATO was checking that the investment decisions SMSF trustees were making were aligned with their fund’s trust deeds and investment strategies.

The ATO was also checking that property purchases met the sole purpose test, which requires superannuation assets to be acquired by the funds for the single intention of providing an income in retirement. It was also monitoring whether transactions were conducted at arms’ length to ensure properties were not being purchased from parties that were related to the trustees.

This article first appeared on Property Observer.

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