Reply To: Company and profitability
The business doesn’t own the property – my self managed super fund (SMSF) does. There are very strict rules governing the amount of rent BlueChip can pay the super fund (a related entity) i.e. it must be the market rent. SO the market rent for the property is circa 130k. The interest and other fees (e.g. strata) are paid by my SMSF. It’s a separate entity to BlueChip. The SMSF has cash/equity and debt in it. It’s fully funded for some time without any tenant at all. The interest on the debt is significantly lower (a multiple smaller) than the income at a market rate of rent.
Partly because of the rules around SMSF borrowing and the accounting standards around SMSFs the whole amount of the fit out for the new office needs to be funded by the business, native the SMSF. Capital improvements can be funded by the SMSF. Fit out is not (as I understand it) treated as capital – it has to be expensed – and thus paid for by the tenant not the owner.7 years, 10 months ago Reply