ASIC warns on rental scheme investment
The Australian Securities and Investments Commission (ASIC) has issued a warning to consumers regarding claims that investments in rental properties managed by the Federal Government via self-managed superannuation funds (SMSFs) would receive $100,000 tax free.
ASIC said it had seen advertisements by SMSF promoters stating consumers could use an SMSF to purchase property using the National Rental Affordability Scheme (NRAS) and receive the sum.
The regulator stated these claims were misleading and did not provide balanced messages about the features, benefits and risks of investing via an SMSF in an NRAS property.
The NRAS is a partnership between the Federal and State and Territory governments to promote investments in affordable rental housing. The scheme offers payments and tax offsets for those who build and lease housing to lower income earners at a rate at least 20 percent below market value.
ASIC has warned consumers that participation in the scheme is subject to restrictions and investors will have to remain within the scheme for 10 years to receive the $100,000 financial incentive. They will be required to rent out the NRAS property at the lower rate to eligible tenants.
ASIC also stated the NRAS was aimed at larger scaled property investments of 100 houses or more and while individual consumers and investors could access the scheme via an approved third party participant, there was no requirement for the incentives to be passed on by the approved participants to investors.
The warning follows comments from the Reserve Bank of Australia which stated in September that investments in property by SMSFs had been heavily promoted after changes to legislation and these might be subject to speculative demand that had not existed prior to the changes.
ASIC expressed similar concerns in April when Commissioner Peter Kell stated the regulator was concerned about the rise in aggressive advertisements pushing property purchases through SMSFs.
"We do not want to see SMSFs become the vehicle of choice for property spruikers. Where we see examples of unlicensed SMSF advice, or misleading marketing, we will be taking regulatory action," Kell said.
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