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SMSF Building Contract Review

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SMSF Building Contract Review ServicePOA

SMSFs are increasingly investing substantial sums and also seeking to improve or add value to their property holdings by way of subdividing, repairing, improving and developing property. However, many SMSFs do not carefully review and negotiate the finer details of building and similar contracts to ensure contraventions of superannuation law do not occur. Naturally, every builder and tradesperson would like to get paid. Most building contracts include clauses authorising the builder to place a mortgage, charge or security interest in respect of the property. It is important to note that the mere presence of these clauses in a contract contravenes an important operating standard that prohibits an SMSF charging/securing its assets, leaving SMSFs open to significant penalties and other consequences. DBA Lawyers can review and draft special provisions to include in building contracts to minimise any contravention risk.

DBA Lawyers can help

We can assist SMSF trustees and their advisers to navigate the legal, tax and commercial issues including:

  •  Providing guidance and advice on the available options and the best way to proceed with negotiating variations to a building contract to avoid or minimise contraventions of superannuation law.
  •  Undertaking a detailed review of each contract to ensure key issues and risks have been considered including seeking to minimise risks such as:
    • engaging in non-arm’s length dealings with potential s 109 of the SISA or non-arm’s length income risks under s 295-550 of the Income Tax Assessment Act 1997 (Cth); or
    • providing financial assistance to a fund member or relative by entering into a building contract with them with potential consequences under s 65 of the SISA.

Before completing any variations to an existing building contract, it is important to obtain appropriate legal advice on how to approach negotiations with the builder.

If you wish to proceed, please email us relevant background including the contract and we can review and respond. Alternatively, please contact us to arrange a suitable time to discuss your options.

Once we confirm your needs, the background details and obtain relevant background documentation, we can provide a fee proposal for your approval.

For more information and related articles

For more information, click on the articles listed below: