The SMSF playbook: what your auditor will actually want to see

1. Confirm the trust deed permits offshore real property

Most SMSF deeds drafted before 2015 are silent on offshore property — silence is not authorisation. Your auditor will want an updated deed (or a deed of variation) that expressly permits the acquisition of real property outside Australia, and ideally names the UAE or the jurisdiction by reference.

Cost is usually $400–$700 with a specialist SMSF lawyer. Do it before you make any reservation transfer — retrospectively curing a deed problem is messy.

2. Document the sole-purpose test

Section 62 of the SIS Act requires the fund be maintained for the sole purpose of providing retirement benefits. An offshore apartment is not automatically a breach, but you must be able to prove the acquisition was made on commercial terms with no incidental benefit to members or related parties.

• No member, relative, or related-party occupation — ever, including 'just for a long weekend'.
• No related-party rental, even at arm's-length rates.
• Rental rate set against market comparables documented at acquisition.
• Property manager engaged on standard commercial terms.

3. The LRBA question

Australian banks generally will not lend against Dubai property in an LRBA structure. The few non-bank lenders that have done it have specific documentation requirements — most SMSF acquisitions of Dubai off-plan are funded entirely from existing fund balance. If you cannot fund the acquisition from internal balance without breaching diversification rules, this strategy is probably not appropriate for your fund.

4. The auditor evidence pack

Your fund's annual auditor will want a documented evidence trail. We prepare an SMSF-specific file for trustees that includes:

• Signed deed of variation (or original deed clause permitting offshore property)
• Dubai Land Department Form F (initial sale contract)
• Construction-stage payment receipts with bank source proof
• Sale & Purchase Agreement showing the fund as buyer
• Independent rental appraisal at the time of first letting
• Property management agreement with an unrelated Dubai property manager

5. Currency at fund level

SMSF financial statements are prepared in AUD. The Dubai property is recorded in AUD at the acquisition date spot rate, with annual revaluations and FX adjustments running through the fund's investment income line. Talk to your fund accountant about whether to elect the temporal method or current rate method for translation — it changes the volatility of your reported member balances year-to-year.

6. The exit question, asked early

Plan the exit before you make the entry. If you intend to satisfy a member's retirement benefit in specie (transferring the property out to a member instead of selling), Dubai title transfer to an individual is straightforward — but the in-specie transfer is a CGT event in Australia and a capital gain event for the fund, with the discount-cap interaction. If you intend to sell at retirement, factor in the 4–8 week repatriation timeline before pension payments are due.

None of the above is advice. We brief your accountant, your auditor, and (if relevant) your AFSL-licensed financial adviser with the Dubai-side documents they need. The recommendation is theirs to make, not ours.