Investments loom after DomaCom's Federal Court win on SMSF investment

Fractional property investment company DomaCom has announced the conclusion to the legal proceedings which the company has been supporting in the Federal Court of Australia.

The proceedings centred on superannuation legislation permitting investment in the DomaCom Fund by an SMSF where a related party was the tenant in the underlying property.

The ATO had (unless an extension of time is granted by the High Court) until 7 September 2018 to file with the High Court an application for special leave if it was to appeal the decision of the Federal Court of Appeal. 

DomaCom's lawyers have advised no such appeal or application for an extension of time has been filed.

Orders were issued last week by the Federal Court as follows:

• There be a declaration that the leasing of the Burwood property by the DomaCom Fund would not cause Aussiegolfa Pty Ltd as trustee of the Benson Fund (Aussiegolfa) to breach the sole purpose test set out in section 62 of the Superannuation Industry (Supervision) Act 1993 (Cth);  
• Aussiegolfa pay 40% of the ATO’s costs of the first instance proceeding (as agreed or otherwise assessed); and/
• Aussiegolfa pay 40% of the ATO’s costs of the appeal (as agreed or otherwise assessed).

In relation to the Administrative Appeals Tribunal Appeal, the Court orders that the ATO pay 100% of Aussiegolfa’s cost of the appeal.

DomaCom CEO Arthur Naoumidis said DomaCom will now focus on addressing the related trust matter and is reviewing its constitution and disclosure documents to address this issue with respect to future sub-funds.