Hello Dipak
Thanks for the question.
Assuming it is consistent with the respective funds’ investment strategies, agricultural land can be acquired by a self-managed super fund. Alternatively, units in a unit trust that owns agricultural land could also be acquired.
There are extra issues to consider if the vendor is a related party of one (or more) of the super funds (for example, the land would need to be business real property at the time of the acquisition) and if the there is going to be a related party tenant (again, the land needs to be used as business real property, proper lease in place, arm’s length rent being charged. etc.).
Presumably, a unit trust structure allows for the investors (three SMSFs and the individual) to exit their investment with relative ease and for other parties to buy into the unit trust. The unit trust can also access the 12-month CGT 50% discount, whereas a company can’t.
There may be a land tax surcharge if the asset is held in a trust in certain States. That said, there may be a land tax exemption if the land is primary production land.
Matters in relation to GST-registration would also need to be considered.
To the extent that a unit trust is used to hold the land, there are extra restrictions that need to considered if the unit trust is considered to be a related party unit trust. For example, to be excluded from being an in-house asset, a related party unit trust cannot have any borrowings (amongst other restrictions).
Happy to hear the thoughts and suggestions of other people on this matter.
Best regards
The Auditors Institute