A definitive determination as to whether items facilitating clean energy generation, such as solar panels, can be included as business real property (BRP) for an SMSF is yet to be reached, a technical specialist has said.
Smarter SMSF technical and education manager Tim Miller noted in order for a fixture to be considered a part of BRP it must form an integral part of the asset and not possess the characteristic of being able to be removed simply.
“Technically [solar panels] can be removed quite easily,” Miller said.
Further, he recognised two recent legal decisions that did not provide any clarity on the current predicament.
“There have been two significant [court cases on this issue] and one identified [wind farm equipment was] a fixture and the other identified that they weren’t a fixture,” he revealed.
“So if you look at those court cases … we’re going to need to see a little bit more [consistency to provide] comfort in that space before I think we can say with any clarity that things like solar panels form part of the business real property with regards to acquiring property for a self-managed superannuation fund.
“So where [do we now] sit with regard to transferring property [into an SMSF]? If you’re looking at property to be transferred in, and you transfer the premises in and there are solar panels attached to the roof, is that actually going to mean the asset doesn’t satisfy the definition of business real property?
“I wouldn’t say that would be the case.”
However, he suggested the situation regarding solar panels in the context of BRP could create an additional compliance issue for SMSF trustees.
“The issue is if [the solar panels] are treated as a separate asset and then they form part of a lease to a related party, then they’re going to sit under the definition of an in-house asset as well,” he said.
“So we’ve got a potential problem to factor in there.”
