Hi Community,
We often get asked whether you can complete transfer transactions through PEXA where the purchasing entity is a superannuation fund, and similarly where the superannuation fund is selling property. The answer in short is yes, however, there are some transactions that are out of scope which I’ve detailed below.
Superannuation fund purchasing property
A superannuation fund will purchase property through:
its trustee, if purchasing using funds of the superannuation fund; or
a bare trustee, if the superannuation fund is borrowing money to fund the purchase.
In NSW you cannot currently note the trustee relationship on title in paper or electronic settlements. The transfer and the title must only be in the name of the trustee or the bare trustee. Please see the NSW Registrar Generals’ Guidelines in relation to this.
To complete the transaction in PEXA, set up the workspace as a normal incoming proprietor workspace. Please see the Help Centre on PEXA’s Community forum for the step-by-step process.
When setting up your client, their name will be the name of the trustee/s or the bare trustee/s, with no reference to the superannuation fund or the capacity as trustee. This will then mean that the transfer will be in the name of the trustee/s or the bare trustee/s only.
You should not set the name of your participant up as, for example, ABC Pty Ltd as trustee for the ABC Superannuation Fund.
You will need to ensure that you retain the appropriate statutory evidence in paper (including but not limited to a correctly referenced purchaser and capacity on the contract) to show the trustee relationship and who the true purchasing entity is for auditing and statutory compliance purposes.
Funding the purchase
As you would do in a normal PEXA settlement, source funds can be contributed to a Workspace by a financial institution providing loan proceeds, through your firm’s trust account or the PEXA source account (purchaser’s equity), or a combination of borrowed funds and purchasers’ equity.
Again, you would need to ensure that you follow all statutory requirements and retain the correct evidence for auditing purposes and ensuring compliance. You may need to work with the superannuation funds’ accountant in this regard also.
Superannuation Funds selling property
The same circumstances apply as above. The workspace is set up as you would set up a normal proprietor on title workspace. See the Help Centre on PEXA’s Community forum for step-by-step processes.
You would then complete the transaction the same as any other proprietor on title workspace.
Out of Scope
There are some transactions involving superannuation funds that are out of scope. For example, you cannot currently complete a transaction in PEXA where the superannuation fund has paid out the loan funds to the financial institution and is now transferring the property from the bare trustee back to the superannuation fund trustee.
We are advised by Revenue NSW that these transactions are stamped pursuant to Section 62 of the Duties Act NSW 1997, and when the stamp duty reference is input in the PEXA workspace, an unsuccessful result will be returned.
We continue to work with Revenue NSW and the Office of the Registrar General NSW to understand what can and cannot be completed electronically. Until such time as we can provide a comprehensive list of superannuation fund transactions that are out of scope, please reach out to your PEXA Direct Specialist or email teamnsw@pexa.com.au if you have any enquiries about this matter.
Please note, this information is to assist in relation to completing electronic transactions involving superannuation funds in New South Wales, but not to provide advice regarding any statutory or other requirements for superannuation funds purchasing or selling property.
Regards
Amanda Keenan
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