“I have seen a lot more clients asking about potentially transferring their property into a more tax-friendly environment and one of the key considerations is whether the property meets the business real property definition,” Mr Song said.

“Sometimes people believe because it’s a residential property that they own, that straightaway it’s not business real property, but it’s not always the case.

“Provided the current use is a business use, it can still meet the definition and there may be a possibility for the member to put the property in their super fund.”

Mr Song said while individual investment properties rarely qualified as business real property, if the property was part of a broader investment, development or management business which could be evidenced through the proper documentation, it was possible to transfer it into the SMSF.

The ATO required evidence of regular business records, a business plan, a proper operational size and scale, and a level of repetition and regularity to business activities in order for a trustee to evidence that the property was part of a proper business, he said.

“If it’s more of a rental business, it’s got to have the sufficient scale and be operated in a businesslike manner in order to be considered a business real property,” Mr Song said.

If the trustee had sufficient documentary evidence to go ahead with the transfer of the property into their SMSF, it was important that all transactions and services related to the transfer be conducted at arm’s length, he added.

“If they are proceeding with such a purchase, they must make sure there is proper conveyancing in place as if the parties are unrelated, so the contract of sale, payment of funds and settlement, and if there’s any loan involved, the cash flows all need to be documented,” Mr Song said.