Generally, SMSFs are prohibited from acquiring assets from a related party.

Related parties of your fund include:

• members of your fund
• associates of fund members, such as relatives, business partners and any company or trusts the member controls or influences, and
• standard employer sponsor – employers who contribute to the fund under an arrangement between the employer and the trustee.

However, a fund may acquire the following assets from a related party if it’s acquired at market value:

• a listed security (for example, shares, units, or bonds listed on an approved stock exchange)
• business real property
• certain in-house assets, provided the market value of your fund’s in-house assets does not exceed 5% of the total market value of your fund's assets, or
• an asset specifically excluded from being an in-house asset.

Business real property, is generally, an interest in land or buildings used wholly and exclusively in one or more businesses. The interest may be a lease, or the property may be owned by the fund. It must be used entirely in a business, but some minor non-business use may be acceptable.

Every business is different and how property is used will determine if it is business real property or not.

If business real property is used in a primary production business such as a farm, it can still meet the test of being used wholly and exclusively in a business even if it contains a dwelling used for private or domestic purposes. The dwelling must be in an area of land no more than 2 hectares and the main use of the whole property can't be for domestic or private purposes.

You need to ensure the level of investment in business real property still meets the investment strategy of your fund, including diversification of assets, liquidity, and maximisation of member returns in your fund.

As with other super fund assets, there can't be a loan or covenant (charge) over an asset (unless the asset was acquired under a limited recourse borrowing arrangement).