Raymond Hempstead, a former accountant and now managing director of One Contract Property, said the offering gives SMSFs more flexibility around where and what type of property they wish to invest in rather than considering only established properties, apartments or townhouses.

“The aim was to give people more choice about how they fully utilise their SMSF to incorporate new builds, and to potentially explore the richer returns of things like NDIS and co-living property investment,” Mr Hempstead said. He started investigating the possibility in 2020 and when he first applied to the ATO for a private product ruling he was turned down.

“They said they already had a public product rule that covered it – SMSFR 2012/1,” he said.

So he went back to the drawing board to find a solution.

“My whole attitude was based on the concept that however you invest and develop outside of super, you should be able to have the same inside super.”

The One Contract Property offering involves a three-step plan.

As a first step, One Contract Property helps the client find the land and choose a builder.

The SMSF then enters into a single-part contract with One Contract Property and pays a 35 per cent deposit. One Contract Property acquires the land and oversees the construction of the property and all payments to the builder.

Upon completion, the SMSF pays the 65 per cent balance. The completed property is transferred. The sale is then finalised, with the SMSF now owning a new investment property.

“What we have done is that instead of the super fund taking liability and risk, we do. One Contract Property is shouldering the risk. The fund doesn’t pay anything until the building is complete which is what the government is happy with.”

Mr Hempstead continued to delve into the importance of working with accountants and advisers to make sure SMSF property investment is done correctly.

“My attitude is that it is your money, and you should be able to decide what is the best investment for your fund by working with your accountants or advisers.”

When asked about the role advisers play in the property investment market, Hempstead spoke about how the One Contract Property solution has seen a positive shift in the industry.

“Until now advisers have steered away from property investment because they haven’t been able to purchase the right property, but this solution gives you the choice to positively gear properties – you can now structure how much income you want to put in as extra into the super fund because it is positively geared.”

Mr Hempstead also spoke about the drawbacks of crossing your fingers and hoping investments in the share market will help grow your super balance.

“If you put the right type of property into super you can magnify and multiply your super retirement, you’re not just sitting back passively hoping the share market will go up,” he said.

“You can still get a weekly income from the property to live on each week and not touch the asset and you have a fully paid-off asset that you can pass on to the kids as well as giving you solid income security that you can live on in retirement.”

Mr Hempstead said it was important to buy property to generate passive, disposable income from rent and to benefit from capital growth.

He added that doing so within an SMSF as part of a retirement security plan produced significant tax advantages.

“Outside of super, property earnings will be taxed at anywhere from 30 to 47 per cent, whereas within super that same investment return attracts a tax of just 15 per cent,” he said.

“For properties purchased outside the super model, that higher taxation level continues even into retirement when those who had bought inside the super model are able to access their funds but are benefiting from tax-free earnings after they’ve reached retirement.”

Daniel Butler, director of DBA Lawyers said SMFS members should always get any arrangement checked out first by both a good lawyer and accountant/financial adviser with SMSF expertise before committing.

“You need to do sufficient analysis and confirmation of the legal, financial and commercial aspects of the arrangement to ensure it will work as promoted and that unnecessary costs or complexity are not involved,” he said.

Learn more about One Contract Property by visiting their website HERE.