{"id":1289,"date":"2022-07-29T05:16:00","date_gmt":"2022-07-29T05:16:00","guid":{"rendered":"https:\/\/actinvest.com.au\/?p=1289"},"modified":"2022-07-29T05:16:01","modified_gmt":"2022-07-29T05:16:01","slug":"smsfs-warned-on-common-mistakes-with-bare-trusts","status":"publish","type":"post","link":"https:\/\/actinvest.com.au\/index.php\/smsfs-warned-on-common-mistakes-with-bare-trusts\/","title":{"rendered":"SMSFs warned on common mistakes with bare trusts"},"content":{"rendered":"<div>\n<p><strong>A specialist law firm has highlighted the importance of ensuring that the bare trust has been set up correctly where SMSFs are looking to borrow money.<\/strong><\/p>\n<\/div>\n<div>\n<p><img loading=\"lazy\" alt=\"\" height=\"317\" src=\"https:\/\/acctweb.com.au\/images\/fp-bare-trust-Aug22.jpg\" width=\"475\" \/><\/p>\n<p>\u00a0<\/p>\n<p>In a recent video, Cooper Grace Ward Lawyers senior associate Keeghan Silcock said that in order for an SMSF to borrow through a limited recourse borrowing trust \u2014 more commonly known as a bare trust \u2014 it is vital that the the bare trust has been established correctly from the outset.<\/p>\n<p>\u201cThis includes providing the SMSF the beneficial interest in the asset that\u2019s being acquired by the bare trust using borrowed money,\u201d said Ms Silcock.<\/p>\n<p>\u201cIt also means allowing the SMSF the right to acquire the asset from the bare trust after one or more payments have been made.\u201d<\/p>\n<p>Ms Silcock said her firm often sees inappropriate provisions being included in the terms for the bare trust.<\/p>\n<p>\u201cAnother common mistake is that an SMSF may sign a contract to acquire an asset before the bare trust has been established correctly. This can cause duty issues in certain jurisdictions,\u201d she warned.<\/p>\n<p>It is also important to understand when an SMSF can use a limited recourse borrowing trust, she said.<\/p>\n<p>This will depend on the asset that the SMSF is looking to acquire using borrowed money.<\/p>\n<p>\u201cA limited recourse borrowing trust can only be used to acquire one single asset. So, if your SMSF is wanting to acquire multiple different assets, unless a certain exemption applies, then you\u2019ll need to establish different bare trusts for each of those different assets,\u201d she explained.<\/p>\n<p>\u201cThere are also restrictions on the changes or improvements that can be made to an asset while it is owned by a bare trust. So, if the SMSF was wanting, for example, to construct a property or significantly renovate a property, then you could not use a bare trust in that circumstance.\u201d<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Miranda Brownlee<br \/>\n25 July 2022<br \/>\nsmsfadviser.com<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<div>\n<p><strong>A specialist law firm has highlighted the importance of ensuring that the bare trust has been set up correctly where SMSFs are looking to borrow money.<\/strong><\/p>\n<\/div>\n","protected":false},"author":1,"featured_media":1290,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1289"}],"collection":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=1289"}],"version-history":[{"count":1,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1289\/revisions"}],"predecessor-version":[{"id":1291,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1289\/revisions\/1291"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media\/1290"}],"wp:attachment":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=1289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=1289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=1289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}