SMSF Commercial Lease Agreement
Your Self-Managed Super Fund (SMSF) can own commercial property. The SMSF can even lease the commercial property to a member. However, the commercial lease agreement must comply with the law. Special rules in the drafting of the SMSF Commercial Lease Agreement are required.
Our SMSF Commercial Lease Agreement satisfies the Superannuation rules.
An SMSF must only benefit you when you have retired. You are not allowed to get any benefit from your SMSF. Sure, your superannuation belongs to you. But you can't have it until you retire.
The rules are so strict that you can't lease from your SMSF a residential property, car or artwork. Even if the rent was a fair market price. The one exception is 'commercial real property'. Your SMSF can lease commercial property to you, your family and other related parties.
Seven rules when leasing commercial property to yourself
When a member leases commercial property from their SMSF, seven additional rules apply. Our SMSF Commercial Lease complies with the strict Superannuation law's seven rules:
1. lease agreement - prepared by a lawyer
2. an arm’s length transaction – the SMSF can't give ‘special treatment’ to a related party
3. market rent - the lease agreement allows you to reset the rent to market, as required
4. due payment - appropriate rent payment dates
5. recovery - the SMSF is required to takes appropriate action to remedy any breaches
6. evidence - sufficient evidence and paper trail for the SMSF auditor and ATO. This confirm that no advantage is given to the member leasing the commercial property
7. legal - complies with both the Retail Shop and Commercial Tenancy legislation throughout Australia and the Superannuation Laws
Special SMSF rules for disputes
Our SMSF Commercial Lease Agreement:
* accommodates low-cost dispute resolution alternatives. This complies with both leasing and Superannuation Laws
* reduces unconscionable conduct claims against the SMSF
* is audit friendly for both your auditor and the ATO
Subletting in breach of the Superannuation Laws
The Tenant has no authority to sublet or assign, under this Lease. This is unless the Landlord and Tenant mutually agree, subject to the Superannuation laws. The ‘waive and variation’ clause permits subletting and assignment — but subject to the Landlord's consent.
Fair Damages that don't breach Superannuation contribution rules
If the Tenant (member) defaults in payment, the landlord (SMSF) recovers liquidated damages, from the Tenant. It is important that this is not a 'contribution' to the fund. Our unique formula calculates damages which avoid 'contribution breaches' by the SMSF.
Without these pre-liquidated damages calculations, a commercial lease breaches the Superannuation law. Most Commercial Leases breach the Superannuation laws.
Waivers ensure ongoing compliance with the SMSF Commercial Lease Agreement
Many lease agreements can't be updated. However, if the Superannuation laws change, then this may render your SMSF non-complying. You suffer penalties of up to half the value of your SMSF.
With our lease, the Landlord may alter the Commercial Lease, together with the Tenant, to suit changing needs. If a term is waived, the Landlord is no longer bound by that requirement and the SMSF fund continues to be compliant.
Need help building your SMSF Commercial Lease Agreement online? Just telephone us. We help you answer the questions.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
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