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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Wealth Advisers Pty Ltd (ABN 35 994 727 125) as a Corporate Authorised Representative (1316489) of Integrity Financial Planners Pty Ltd (AFSL 225051). Integrity One Wealth Advisers Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

About SMSF investment restrictions

SMSFs are complex, here we have outlined some of the restrictions to help you before you make any decisions on self-managed super fund (SMSF) investment. You must ensure you understand any restrictions on SMSF investments to avoid any penalties.

There are some exceptions, however, generally your SMSF must not:

• lend or provide financial assistance to members or related parties
• acquire assets from members or related parties
• use collectables and personal use assets in a way that provides a present-day benefit
• allow trust distributions owing to the SMSF to remain unpaid
• breach the in-house asset rules
• borrow money.

No one associated with your SMSF should get a present-day benefit from its investments.

If you don’t comply with the investment restrictions, the ATO may take a range of actions, including:

• imposing penalties
• making the fund non-complying
• disqualifying you as a trustee
• prosecution of trustees.

Who are related parties?

A related party of your SMSF includes:

• all members of your fund
• associates of fund members, which include
  • the relatives of each member
  • the business partners of each member
  • any spouse or child of those business partners
  • any company or trust the member or their associates control or influence
• standard employer-sponsors (employers who contribute to your SMSF for the benefit of a member under an arrangement between the employer and a trustee of your fund)
• associates of standard employer-sponsors, which include
  • business partners and companies or trusts the employer controls (either alone or with their other associates)
  • companies and trusts that control the employer
  • relatives of an employer sponsor.

A relative is any of the following:

• a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse
• a spouse of the member and any individual specified above.

Loans and financial assistance

Your SMSF can’t provide loans, or direct or indirect financial assistance, to a member or a member’s relative. For example, you can’t use your SMSF as guarantor for a loan for a member or a member’s relative.

Loans must:

• be in the best interests of the members
• comply with the SMSF’s investment strategy
• be conducted on a commercial arm’s length basis.

If you run a business through your SMSF, you also can’t overpay a member or relative of a member for their services. If you employ a member or a relative of a member, their salary or wage must not be higher than the standard salary for that type of role.

Acquiring assets

Your SMSF can’t acquire an asset from a related party unless the price reflects the market value and is:

• a listed security (for example, shares, units or bonds listed on an approved stock exchange)
• business real property
• an asset specifically excluded from being an in-house asset.

You must also ensure the market value of your fund’s in-house assets doesn’t exceed 5% of the total market value of your fund’s assets.

Crypto assets and private company shares are not listed securities and can’t be acquired from a related party.

If an asset is not acquired or sold at arm’s length, all or part of any income from the transaction may be non-arm’s length income and taxed at the highest marginal rate.

To help you comply with the requirements, use the valuation guidelines for self-managed super funds.

Collectables and personal use assets

Where your fund invests in collectables and personal use assets, this must be for genuine retirement purposes, not to provide any present-day benefit.

Assets such as artwork, boats, jewellery, vintage cars and wine are described as collectables and personal use assets.

Natural diamonds (including pink diamonds), when held in loose form, are not considered collectable or personal use assets. As such, they do not have specific storage and insurance requirements. However, for these types of assets it is recommended trustees:

• hold adequate insurance
• consider storage arrangements.

‘Diamonds held in loose form’ means they cannot be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.

Collectables and personal use assets can’t be:

• used by or leased to a related party (if leased to an unrelated party it must be at arm’s length)
• stored or displayed in the private residence of a related party (this includes all parts of the land the residence is situated on and all buildings on that land, such as garages or sheds)
• displayed in any other premises owned by a related party (they can be stored there provided they’re not visible to clients and employees).

You must keep a written record of the reason for deciding where to store the assets.

Collectables and personal use assets must be insured. You should consider the availability and cost of insurance before investing in them. Items must be insured within 7 days of the fund acquiring them and the fund must be listed as the owner and beneficiary of the policy.

These assets can be sold to related parties provided the sale is at market value as determined by a qualified, independent valuer.

Unpaid trust distributions

If your SMSF is entitled to a distribution from a related trust but you allow it to remain unpaid, you may contravene the:

• in-house asset rules
• arm’s length rule
• sole purpose test.

In-house assets

You are restricted from having in-house assets that comprise more than 5% of the market value of the SMSF’s total assets.

An in-house asset is any of the following:

• a loan to a related party of your fund
• an investment in a related party of your fund
• an asset of your fund that is leased to a related party, such as business equipment or machinery.

Any lease must be made on an arm’s length basis and reflect the market value.

If at the end of the financial year your SMSF’s in-house assets exceed 5%, you must prepare a written plan to reduce in-house assets to 5% or below. This plan must be prepared before the end of the following financial year. Trustees must also ensure the plan is carried out.

There are some exceptions to in-house assets, including:

• business real property that is leased between your fund and a related party of your fund
• some investments in related non-geared trusts or companies.

The in-house asset rules for assets owned before 11 August 1999 were defined differently. If your SMSF owns assets that were acquired before this date, you should review your fund’s investments to ensure you are complying with the current rules.

Decrease in asset values due to COVID-19

Some SMSFs may have experienced a decrease in asset values due to the economic impact of COVID-19. If this resulted in a breach of the in-house asset rules as at 30 June 2020, or the in-house assets being more than 5% of the total assets, the fund was required to prepare and implement a rectification plan by 30 June 2021.

Business real property

Business real property generally means land and buildings used wholly and exclusively in a business. It’s an exception to the in-house asset and related party acquisition rules.

If business real property contains a dwelling for private or domestic purposes such as a farm, it can still meet the requirements of being used wholly and exclusively in a business if:

• any dwelling used for private or domestic purposes is in an area of land no more than 2 hectares, and
• the main use of the whole property is not for domestic or private purposes.

Running a business in an SMSF

If running a business through an SMSF, it must be:

• allowed under the trust deed
• operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts.

You should get professional advice before running a business through your SMSF.

It is important to ensure the sole purpose test is not breached. Issues that attract our attention include those where:

• the trustee employs a family member (we look at things like the stated rationale for employing the family member and the salary or wages paid)
• the ‘business’ is an activity commonly performed as a hobby or pastime
• the business run by the fund has links to associated trading entities
• there are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.

Contact us if you have any questions regarding your SMSF, we’re here to help.

Source: ato.gov.au April 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-investing/restrictions-on-smsf-investments/what-are-the-smsf-investment-restrictions.

Spring. The season of new growth, longer days, and an explosion of “For Sale” signs popping up like daisies. It’s no secret this is the busiest time of year for real estate and it’s not just the weather that’s warming up. The property market is buzzing, with a greater range of homes to choose from, more buyers out there, and property values on the rise across much of Australia. 

But while spring brings plenty of opportunity, it can also get a little…frantic. The trick is to stay cool-headed in a hot market. Here’s how.

A season of opportunity

Spring is notorious for being the most active selling period of the year. That means you’ll likely have more properties to choose from, which is great news if you’ve been looking for a while or holding out for “the perfect home”. But it also means more buyers are emerging from hibernation. And this year, there are plenty of them. According to a recent report, 44% of Australians plan to buy a home in the next five years.

As we enter the first rate cutting cycle in years, buyers are approaching the market with greater confidence – and often with a pre-approval in hand. Pre-approval volumes are  up 30% on 2024 figures and 50% up from February 2023.

Translation? The spring market is competitive and if you’re not ready, you could easily find yourself left behind.

Sort your finances first

The first step (before you even start trawling listings or lining up inspections) is getting your finances sorted.

There’s nothing worse than falling in love with a property only to realise you’re not in a position to act quickly enough. So, it’s important to understand how much you can borrow, be clear on what your repayments might look like, and ideally also get a home loan pre-approval in place. Pre-approval gives you a concrete idea of your budget and shows sellers and agents that you’re serious. In a fast-paced market, that can make all the difference.

Do your research (it’s more fun than it sounds)

Buying a property is one part emotion and five parts research and that means doing your homework.

Get familiar with the suburbs you’re targeting. Check out recent sales in the area and compare asking prices. Understand the local amenities, schools, transport links, and development plans. If a home seems unusually cheap or too good to be true, there’s probably a reason.

And don’t just rely on glossy listings. Talk to agents, attend auctions (even if you’re not bidding), and keep track of how quickly properties are selling. The more time you spend understanding the market, the more confident you’ll be when it’s time to buy.

Don’t let the styling sway you

Spring is a clever time to sell. The flowers are blooming in the gardens; the sun is shining in the windows and vendor stylists know exactly how to make a home look like your future dream life. But as charming as a styled home might be, it’s important to look past the surface.

Staging is designed to help you picture yourself living there, but it can also distract from potential flaws. Ensure you look below the surface. Is the layout right for your lifestyle? Is there enough storage? What’s the condition of the roof, wiring, or plumbing?

And yes, the roses in the garden might be spectacular, but they’re not going to help with your morning commute.

Be fast, but don’t be rash

It’s a delicate balance: moving quickly without being rushed. In a spring market, hesitation can absolutely cost you, especially when the competition is high. But that doesn’t mean throwing caution to the wind or offering more than your budget allows just to ensure success.

If you’ve done the prep work (budget sorted, criteria defined and pre-approval secured) you’ll be ready to act swiftly when the right property comes up.

And if you miss out? Don’t panic. There’s always another property coming onto the market. Keep your strategy tight, your expectations grounded, and your eyes on the long game.

Whether you’re stepping into the market for the first time or moving into your next chapter, a little preparation can give you that spring in your step to make your property dreams come true.

If you have any questions or need any information please give us a call on 039723 0522.

The Australian Council of Trade Unions is pushing to limit negative gearing and capital gains tax discounts to just one investment property.

So who stands to win or lose the most if it happens? And is the Albanese government likely to act on the proposal, given Labor has been burnt on the issue before?

Research on Australian housing finance shows negative gearing and capital gains tax discounts were not designed with rental housing in mind – yet this is where they’ve had their greatest impact.

How do the tax breaks work now – and what might change?

Under current negative gearing rules, investors are able to deduct losses incurred from an investment property (such as interest payments and other expenses) against their own taxable income. These can be claimed on an unlimited number of investment properties.

High-income earners tend to have greater incomes to buy properties, and larger tax bills to make deductions against.

With the 50% capital gains tax discount, only half the increase in price of an asset is taxed when it is sold. High-income earners also tend to benefit more from this than low-income earners.

Under the ACTU’s proposal, the current negative gearing and capital gains tax discount arrangements would stay the same for the next five years.

That would give investors time to adjust their property portfolios before a change to only getting tax breaks on a single investment property.

ACTU Secretary Sally McManus put forward the idea at the national economic reform roundtable. She warns continuing to give investors tax discounts to own multiple properties is making home ownership “nearly unimaginable for young people”.

Who would win and lose under the proposal?

According to analysis of the most recent Australian Tax Office statistics from 2022-23 by RMIT researcher Liam Davies, there were 2,261,080 individuals with an “interest in property” – meaning they have an investment in at least one rental property.

Of those investors, 1,117,175 (49.4%) were negatively geared. And of those who were negatively geared, 810,875 have an interest in one property, and 306,300 have an interest in two or more properties.

1 in 7 property investors would be affected by the ACTU’s proposal

Source: ATO Taxation Statistics 2022-23, Table 27

So yes, there would be some losers under the ACTU proposal. About 306,300 out of 2,261,080 investors – 13.5%, or roughly one in seven property investors – would be affected by the new proposed limits. That’s just over 1% of all Australians.

But for the majority of other investors who negatively gear now – 810,875 people at last count – they would continue on with the same tax breaks as before.

What tax breaks cost now – and what they could fund

It’s also worth noting that negatively geared investors “lost” (or claimed deductions for) a total of A$10.4 billion in 2022-23, with $4.8 billion being “lost” by investors with an interest in two or more properties.

The ACTU estimates its change would raise about $1.5 billion in tax revenue each year.

That money could go towards housing in other areas – such as the government’s Housing Accord target of helping finance 40,000 social and affordable homes over the next five years.

We’ve known for years that a tiny fraction of investors actually get the vast majority of these tax breaks.

The Parliamentary Budget Office has reported around 80% of the benefits of the capital gains tax discount go to the top 10% of Australian income earners, while 60% of the benefits of negative gearing go to the top 20% of income earners.

Over the past decade, foregone revenue from negative gearing and capital gains taxation has totalled more than A$80 billion.

Tax breaks that were never meant to work this way

Neither negative gearing nor the capital gains tax discount were initially targeted at rental housing.

Negative gearing provisions actually date back to an unclear loophole in the 1936 Income Tax Assessment Act.

And until as recently the mid-1980s – just two generations ago – there was no capital gains taxation in Australia. Back then, it was much harder for investors to get finance to buy rental properties.

The big change came in 1999, when then-prime minister John Howard acted on a Treasury recommendation and applied a blanket 50% discount to all assets held for a year or more.

At the time, the stated aim was to get more people investing in Australian businesses, such as through the share market. Instead, many people ploughed money into housing and have bid up house prices ever since.

What are the prospects of change?

Within the past year, Labor has repeatedly ruled out changing negative gearing or the capital gains tax discount.

Labor has been cautious about it ever since Bill Shorten’s failed 2019 election campaign, which proposed limiting negative gearing to newly-built dwellings and reducing the capital gains tax discount from 50% to 25%.

But the simplicity of the ACTU’s proposal – and the fact that it would leave the majority of property investors untouched – may make it simpler to implement and also easier to win over voters.

The Greens have already said they back the ACTU’s proposal. So if the Albanese government chose to act, it would have enough support in parliament to pass it.

Public support for limits on how many properties investors can own has also grown in recent years. Gen Z and Millennial voters now comprise almost half the electorate – and their most pressing concern is housing (un)affordability.

Source: https://theconversation.com/how-many-of-australias-2-2-million-property-investors-would-lose-out-under-a-new-plan-to-curb-negative-gearing-262595

Thinking of buying a home? That’s a big step and an exciting one too. But before you start scrolling through real estate listings, it’s important to consider how any debt you are holding will impact your application.

When you apply for a home loan, lenders look at more than just your income. They assess the whole picture to determine how much they’re willing to lend you. One of the key pieces of that puzzle is your existing debt. Depending on what you owe and to whom, it could either reduce the amount you can borrow or impact your chances of being successful in your application.

How lenders decide what you can borrow

Lenders calculate what’s known as your borrowing power. This is the amount they believe you can comfortably afford to repay on a home loan. To figure that out, they consider your income, your expenses, existing debt, credit history, savings patterns, and the size of your deposit. They’ll also take into account the property you’re wanting to buy, the term of the loan, and type of loan.

It all comes down to risk. A lender wants to be confident you can meet your repayments without stretching yourself too thin. And that’s where the type of debt you hold becomes very important.

Some debt is better than others

Not all debt is equal. Some types of debt are seen as manageable or even responsible, while others are not viewed favourably.

Let’s start with personal loans, particularly those used for holidays, weddings or other one-off costs. These are unsecured and tend to have higher interest rates, which makes them less attractive from a lender’s perspective. On the other hand, a car loan that’s secured against the vehicle might be seen in a slightly better light, though it still reduces your capacity to take on a mortgage.

Student debt, like HECS or HELP, is generally treated more leniently because of its income-based repayment structure. But lenders still factor it in when assessing how much disposable income you have.

Credit cards can be especially tricky. It’s not just the balance you owe that matters – it’s the limit. Even if you clear your balance each month, a high limit can work against you because it represents potential debt.

Buy now, pay later services have become increasingly popular, but they also tend to be red flags for lenders. If you’re regularly using these services, it could suggest you’re relying on short-term credit to get through the month.

Then there’s co-borrowed debt, where you’ve taken on a loan with someone else. Even if you’re not the one making the repayments, a lender will still treat that debt as your responsibility. And if you already have an existing mortgage, that naturally has a big impact on what you can afford to borrow next.

Steps to reduce the impact of debt

If you’re keen to strengthen your loan application, there’s plenty you can do. Start by checking your credit report to make sure everything listed is accurate and sort out any errors or unexpected surprises.

Focus on paying off high-interest debt first, especially credit cards. If you can, reduce your card limits or close accounts you’re not using. That alone can make a noticeable difference to your borrowing power.

Try to avoid taking on any new debt in the months leading up to your application. A new personal loan or store finance might seem manageable now, but it could make your finances look more stretched than they actually are.

The goal is to show lenders that you’re in control of your money. That means a steady savings history, low debt levels, and a clear plan for managing repayments once you take on a mortgage.

Remember, debt isn’t everything

While your debt levels play a major role in the loan assessment process, don’t be discouraged if you’re not completely debt-free.

What matters most is how you manage the debt you do have and the steps you’re taking to get your finances into shape. If home ownership is your goal, now’s the perfect time to start managing your debt and building up your financial confidence.

Your future self (with the house keys in hand) will thank you for it.

If you have any questions or need any information please give us a call on 039723 0522.

Spring is set for a bumper selling season

Housing values continued to gain momentum nationally for the seventh consecutive month with an increase of 0.7% according to figures from Cotality (previously Corelogic). This is the strongest gain since May 2024.

Eliza Owen, head of research at Cotality stated that the drivers of the increase in home values is straightforward.

“You’ve got more demand in the housing market, with real wages growth up to its highest level in five years, lower interest rates and more consumer confidence aiding housing purchases,” Ms Owen said.

It appears to be a sellers’ market this spring as home prices are set to continue to rise and fewer properties are being listed for sale. Cotality Australia’s research director, Tim Lawless said “Vendors are in a strong position as we head into spring.”

Growth is set to continue

The interest rate cuts in February, May and August have spurred on buyer demand as borrowers have increased borrowing capacity. “Once again we are seeing a clear mismatch between available supply and demonstrated demand placing upwards pressure on housing values”, said Tim Lawless.

“The annual trend in estimated home sales is up two percent on last year and tracking almost 4% above the previous five-year average. At the same time, advertised supply levels remain about -20% below average for this time of the year.”

The national median house price is now $848,858, up 4.1% over the year. Brisbane achieved the highest monthly growth rate, up 1.2%, while Hobart was the only capital which lost ground, down by 0.2%.

Fewer properties hitting the market

While auction clearance rates rose to 70% in August, the highest since February 2024, there are low levels of properties being list for sale.

Tim Lawless said “We are starting to see the usual start of spring upswing in new listings coming to market, but from a low base. A pick up in the flow of stock coming to market through spring will be good news for buyers who generally have limited choice at the moment.”

Other factors set to boost the market

Market confidence is set to remain as consumer sentiment reached a 3-and-a-half year high in August, core inflation is around the mid-point of the RBA’s target, as well as further interest rates cuts, along with the expansion of the First Home Buyer Guarantee due on 1 October.

“Saving for a deposit is one of the biggest hurdles for accessing home ownership. Saving a 5% rather than a 20% deposit could shave around 10 years off the time it takes to accrue a deposit in an expensive market like Sydney,” Mr Lawless said.

Households are continuing to accrue savings with accumulated savings nearing pre-pandemic levels in March.

Wages growth is another factor that is looking to bolster the market with real wages growth at 1.3% per annum, the highest levels since June 2020.

On the downside

Affordability continues to constrain the market and will keep growth levels steady, along with the pressure on the growth in population which is an ongoing issue with housing supply.

Dwelling values over the quarter

Melbourne

The Victorian capital posted a 1.0% quarterly move according to Cotality figures, taking the city’s median dwelling price to $803,104. Investors should take note that the gross rental yield figure for Melbourne is 3.7%.

Sydney

In the three months to August, Sydney experienced a dwelling value change of 1.7% resulting in a median of $1.224 million. The gross rental yield for the Harbour City remains the lowest of the capitals at 3.0%.

Brisbane

The Queensland capital continues to record the second most expensive spot for dwelling values at $949,583 and a quarterly rise of 3.0%. Brisbane has recorded a gross rental yield of 3.6%.

Canberra

The national capital recorded a rise of 1.5% during the quarter with the median now sitting at $872,957. For Canberra, the gross rental yield is 4.1%

Perth

Perth prices increased 3.1% over the quarter, taking its medium to $841,928. Perth recorded 4.2% gross rental yield.

For more information about how you might be able to purchase a property in the current market, get in touch with us today.

Note: all figures in the city snapshots are sourced from: Cotality national Home Value Index (September 2025) 

If you have any questions or need any information please give us a call on 039723 0522.