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.
