Following on from the previous blog on record keeping, below is yet another example which highlights the importance of record keeping for SMSFs.
Where it can go wrong – another real life example
L and M are members of the L & M Super Fund and are the original trustees. In 1993 a newly incorporated company called LM Holdings Pty Ltd was appointed trustee.
In 1997 the Fund buys a property. A title search for the property shows that ‘LM Holdings Pty Ltd’ is the registered owner.
In 2014 L and M divorce and M becomes the sole member of the Fund. A new trustee, Life after L Pty Ltd is appointed.
The appropriate forms are completed to change the name on the title of the property. An application is submitted to the Office of State Revenue (OSR) for concessional stamping.
OSR requests evidence that LM Holdings Pty Ltd owns the property as trustee of the Fund. The records showing that company’s appointment as trustee in 1993 have been lost. The contract of sale (which showed ‘LM Holdings Pty Ltd as trustee for the L & M Super Fund’ as purchaser) has also been lost.