The date for a Federal Court hearing to determine if the DomaCom fractional property offering represents one trust only has been set, with the matter to be decided on in late November.
“What happened last Wednesday was we got the hearing date set, so 27 and 28 November is when our hearing will be proceeding,” DomaCom chief executive Arthur Naoumidis informed attendees at the 2017 selfmanagedsuper Trustee Empowerment Day held on the Gold Coast last Friday.
“So we’re asking the judge to rule DomaCom is one widely held trust, which means it’s not an in-house asset or a related trust, and DomaCom cannot breach the sole purpose test.
“What it will mean, if we win, is people can use their SMSFs to co-invest with their children’s SMSFs and non-SMSF assets to acquire say an apartment in the DomaCom fund and the child can apply to be a tenant.”
Naoumidis pointed out this type of strategy was not currently available to SMSFs.
However, if a favourable Federal Court ruling is granted, a typical scenario that then would be allowable is one where parents and their child or children could use money from their SMSF, as well as money outside of super, to invest in DomaCom sub-funds to acquire part of a residential property and then have one child or the children to apply as residents in the premises.
According to Naoumidis, this strategy would allow the best alignment of interests between property owner and property occupier, but would need to be executed with a proper arm’s-length arrangement.
“We would instruct the property manager that you must receive commercial property rent and you also would have the lowest risk tenant and the lowest risk tenant is someone who owns units in the sub-fund,” he said.
“That’s how we believe it would work.”