Build an SMSF Property Compliance Pack for the Annual Audit

Every Australian self-managed super fund that holds rental property must produce an annual SMSF property compliance pack for an approved SMSF auditor before the SMSF Annual Return is lodged. The pack evidences the sole purpose test, arm's-length pricing, the related-party rules, and any Limited Recourse Borrowing Arrangement (LRBA) in place — assembled from rates notices, water bills, body corporate and owners corporation levies, agent disbursement statements, trades invoices, insurance certificates, lease records, LRBA loan statements, and SMSF bank statements. The same documents populate the SAR rental schedule.

The auditor on the file is an ASIC-registered approved SMSF auditor performing a financial and compliance audit before lodgement. Where the audit finds a contravention that meets the reporting thresholds, the auditor lodges an Audit Contravention Report (ACR) with the ATO. The pack is what the audit opinion stands on, and what the SAR's rental schedule numbers can be defended against, fund-by-fund, line-by-line.

For the property in the fund, the audit follows guidance the auditing standards body has set explicitly for direct holdings. The AUASB Guidance Statement GS 009 on SMSF investments directs SMSF auditors that non-monetary items such as property require alternative methods to arrive at market value, because the quoted-price evidence available for listed assets does not exist for direct property holdings. That single direction sets the tone for the rest of the pack: every figure on the audit file needs an evidence chain the auditor can read.

The compliance lenses every property document must survive are well known by name: sole purpose test (SIS Act s62), the s66 acquisition rule, the s71 in-house asset rule, the s109 arm's-length requirement, the s67A LRBA structure, the s67B repair-vs-improvement line, the business real property (BRP) exception, and the SISR 8.02B annual market valuation requirement. They run together on a single property file, and the auditor reads the documents through all of them at once.

The Audit-Pack Document Inventory

Every property document the fund holds must support both the income or expense figure it carries and at least one of the SMSF-specific compliance lenses. Missing documents and undocumented amounts are the auditor's first finding. The inventory below is the SMSF property audit evidence pack an approved SMSF auditor expects, in the language the practitioner uses on the file.

Council rates notices — annual or quarterly per local government area. Evidences ownership in the SMSF trustee's name (or in the bare trust trustee's name where there is an LRBA) and the deductible council rates expense. For a fund with property across more than one LGA, the multi-LGA Australian council rates notice extraction walkthrough covers the per-LGA structural variation.

Water rates and utility bills — state-specific structure, with billing authority varying by jurisdiction. Evidences the deductible water rates expense and, where the lease provides for tenant recoupment, the outgoings line the tenant has paid back to the fund.

Body corporate, owners corporation, and strata contribution notices — naming follows the state, but the role on the audit file is the same. Evidences admin-fund and sinking-fund (or capital-works) levies as deductible expenses, and points to the strata insurance certificate of currency where the scheme insures the building. For NSW funds, the NSW strata levy notice extraction to spreadsheet walkthrough is the document-level deep dive this pack-level inventory aggregates.

Land tax assessments — state-by-state, where the SMSF or the bare trust trustee crosses the threshold for the relevant state. Evidences the deductible land tax. Funds with property across more than one state will recognise the multi-state Australian land tax assessment extraction layout — each state's assessment carries its own threshold logic and grouping rules.

Property manager disbursement statements — PropertyMe, PropertyTree, Console, Re-Leased. The disbursement statement is the primary income and expense source for tenanted residential property: gross rent received, PM commission, letting fees, repairs paid through the agent, statutory deductions, and the agent's net remittance to the SMSF bank account. Each platform has its own column shape; the PropertyMe, PropertyTree and Console disbursement statement extraction walkthrough handles the variation across them.

Trade invoices — plumbers, electricians, smoke alarm contractors, gardeners, cleaners, pest controllers, building inspectors. Evidences the deductible repair expenses and, under an LRBA, the repair-vs-improvement line that the s67B test depends on. The invoice description is the auditor's primary signal of which side of that line the spend sits.

Landlord insurance certificate of currency or insurance invoice. Evidences that the insured party is the SMSF (or the bare trust trustee on the SMSF's behalf) rather than a member, and the deductible premium for the FY.

Tax depreciation schedule. Quantity-surveyor prepared, covering Division 40 plant and equipment effective lives and Division 43 capital works deductions. For QS reports that need to feed the property workpaper, Australian tax depreciation schedule extraction keeps the Div 40 and Div 43 lines spreadsheet-ready.

Lease document. Especially load-bearing for BRP commercial leases to a related-party tenant. Evidences tenant identity, the lease term, the rent payable, the rent review mechanism, and (when read against external comparables) the arm's-length nature of the lease terms. ATO commentary recurringly flags absent or inadequate lease evidence as an audit-file weak point, and that lens is sharpened where the tenant is related.

Tenant rent ledger. Especially relevant for related-party tenants. Evidences rent invoiced versus rent received — the auditor's test that the rent is at market and that it is actually paid rather than informally waived or reduced.

SMSF bank statements for the financial year. Evidences that rent was receipted to the SMSF account, that expenses were paid from the SMSF account, and that LRBA loan repayments (where applicable) originated from the SMSF account.

LRBA loan statements — from the member-related lender or the arm's-length bank. Evidences interest paid, principal repaid, and the opening and closing loan balance for the SAR.

Bare trust, Custodian, or Holding trust deed. LRBA only. Evidences the legal separation of beneficial title (in the SMSF) from legal title (in the bare trust trustee), which is the structural backbone of s67A compliance.

Annual market valuation evidence. RP Data report, comparable sales schedule, agent appraisal, or independent valuer's report depending on the property and the auditor's risk read on the fund. AUASB GS 009 and SISR 8.02B require objective and supportable market value evidence, and 2026 commentary on stagnating market values has tightened expectations on what a desktop estimate can carry on its own — particularly for funds with related-party leases or LRBA structures, where the valuation is a compliance datum, not just an accounts entry.

Sole Purpose, Acquisition, In-House Asset and Arm's Length: The Lenses Every Document Must Survive

Four lenses apply to every property-holding SMSF, regardless of whether there is an LRBA on the file. They are usually treated separately in the available content — one explainer per section. On a working pack they run simultaneously, and a single document is often doing work on more than one lens at the same time.

Sole purpose test (SIS Act s62; SMSFR 2008/2). The fund's property exists for the retirement-benefit purpose of the members and no other purpose. The lease is the most heavily weighted document on this lens: for residential property, it must show no use by the trustees, members, or any related party. The insurance certificate of currency must name the SMSF or the bare trust trustee — not a member. Rent receipts must trace to the SMSF bank account so the income flow is consistent with the fund being the genuine owner. Trade invoices need to be free of private-use indicators, including work being done at the trustee's home address rather than the fund's property. ATO commentary has flagged absent or inadequate lease evidence as an audit-file weak point on this lens for several years running, and the weakness sharpens when the tenant is related.

Acquisition rule (SIS Act s66). An SMSF cannot acquire assets from a related party except under defined exceptions. For property, the exception that matters is business real property used wholly and exclusively in one or more businesses — SMSFR 2009/1 sets the business-use test. Documentary evidence is generally one-time: the contract of sale, market-value evidence as at the acquisition date, and (where the BRP exception is being relied on) evidence of the related party's wholly-and-exclusively business use as at acquisition. The audit file inherits the acquisition evidence each year.

In-house asset rule (SIS Act s71). In-house assets are capped at 5% of the fund's total assets at year-end. Property leased to a related party that does not qualify as BRP is an in-house asset and counts against that cap; BRP leased to a related party is excluded by the BRP carve-out. The audit file therefore carries the BRP characterisation (where claimed) and the lease itself. A fund whose related-party tenancy slips out of BRP one year — because the tenant's business use changes — can move from compliant to in-house-asset-cap-breached without anyone noticing until audit.

Arm's-length requirement (SIS Act s109). Every transaction the SMSF enters into must be on commercial terms. For property: rent at market, repairs at market, property management fees at market, insurance at market. The documentary evidence is transaction-specific. For a related-party tenant, the auditor expects an independent rent appraisal or comparable market analysis on file as at the lease commencement and at each rent review. For a related-party trade contractor, three quotes or comparable invoice data sit on the file. The PM agreement is on standard commercial terms; renewal correspondence at each rent review goes on the file as the running record. The practical test is whether an external appraiser or the auditor reading cold could reproduce the conclusion that the SMSF arm's length related-party rent evidence supports market terms.

LRBA, Bare Trust and the Repair-vs-Improvement Line

Where the SMSF borrowed to acquire the property, the pack carries a second layer of evidence specific to the Limited Recourse Borrowing Arrangement. The s67A structure is documentary by design — the auditor needs to see each piece on file, and to see that the year's transactions respected its boundaries.

LRBA structure (SIS Act s67A). The SMSF borrows on a limited-recourse basis to acquire a single acquirable asset. Legal title to the property is held by a bare trust — variously named Custodian or Holding trust depending on the deed precedent. Beneficial title vests in the SMSF, which receives the rent and bears the outgoings. The lender's recourse on default is restricted to the borrowed asset; the rest of the fund is shielded. The documentary evidence covers each element: the executed bare trust or Custodian deed; the loan agreement, with limited-recourse terms and the security clause confirming the lender takes recourse only against the property; the contract of sale showing the bare trust trustee as legal purchaser; and the SMSF trustee minutes authorising the LRBA at the time it was entered into.

The settlement records form the cost-base trail and live on the audit file from acquisition onwards. The PEXA settlement statement and adjustments extraction walkthrough covers the structural shape: purchase price, settlement adjustments for council rates and water apportioned at settlement, stamp duty, and any LRBA-related disbursements. The figures end up in two places — the property's cost base for CGT purposes, and the rates and water expense lines from settlement to year-end.

Single acquirable asset rule. A single LRBA funds one fungible asset. Two strata lots on separate titles cannot share one LRBA, even if they sit in the same building. A house and an adjoining vacant block on a separate title cannot share one LRBA, even if the trustee intends to treat them as one investment. Evidence: title searches at acquisition, the contract of sale, and any private ruling addressing edge cases the trustee asked about before settlement.

Loan statements feed the SAR and the bank reconciliation. The annual interest figure populates the InterestLRBA expense line on the per-property spreadsheet. Principal repayments and the opening and closing loan balance feed the fund's statement of financial position rather than the rental schedule. Cross-checking the LRBA loan statement against the SMSF bank statement is part of the recon: every loan repayment must originate from the SMSF account, not from a trustee personal account or a related-party lender's clearing account that has not been reconciled back to the fund.

Repair vs improvement under s67B (SMSFR 2012/1 builds on the LRBA framework). Borrowed funds can be applied to maintaining or repairing the property, but cannot fund an improvement that fundamentally changes the asset. The line falls on the trades invoice description, not the trustee's intent:

• Replacing a damaged hot-water system with a like-for-like equivalent — repair, allowed under the LRBA.
• Repainting after tenant damage — repair, allowed.
• Adding a second storey — improvement, not allowed on borrowed funds.
• Adding a swimming pool — improvement, not allowed on borrowed funds.
• A full kitchen replacement to a higher specification — improvement, not allowed even where the trades invoice is titled "kitchen renovation". The nature of the work is what s67B is testing; the wording on the invoice is the auditor's first signal.

The trades invoice, the scope of works document, and (for capital works) the building permit are the documentary thread the auditor traces. Improvements funded from non-borrowed cash are permitted; the SMSF bank statement, the trustee resolution, and the cost-base record need to evidence that funding source.

The Per-Property Spreadsheet Schema

The heterogeneous document pack collapses into a single working file: a per-property income and expense ledger with audit-only columns the auditor depends on. The schema below is the SMSF property invoice extraction spreadsheet — one row per property per financial year, every column tied to a document in the inventory or to a compliance test that document supports.

PropertyID, FY, RentReceived, OutgoingsRecouped, GrossIncome,
CouncilRates, WaterRates, BodyCorpFees, LandTax, Repairs,
PMFees, Insurance, SmokeAlarm, Cleaning, OtherExpenses,
Depreciation, InterestLRBA, NetIncome, RelatedPartyFlag,
ArmLengthEvidence, SourceDocCount, BankReconCheck

PropertyID and FY. Identity and period. Every line ties to one property in one financial year, so a multi-property fund's working file is a stack of rows the auditor and the SAR can both read.

RentReceived, OutgoingsRecouped, GrossIncome. RentReceived is what flowed into the SMSF bank account in the year — not what was invoiced. OutgoingsRecouped is the tenant's contribution to council rates, water rates, and other outgoings under a commercial lease where the lease provides for recoupment; on a residential lease this column is usually zero. GrossIncome is the sum and is the SAR-facing rental income figure before deductions.

CouncilRates through OtherExpenses. Deductible expenses, one column per document type in the inventory. Each column maps to a specific document: CouncilRates to the rates notices, WaterRates to the water bills, BodyCorpFees to the BC or OC contribution notices, LandTax to the state land tax assessment, Repairs to trade invoices for maintenance work, PMFees to the property manager disbursement statements, Insurance to the landlord insurance certificate. SmokeAlarm and Cleaning are split out from Repairs because they recur on most residential tenancies and are commonly missed when collapsed into a generic Repairs total. OtherExpenses is the catch-all for legitimate deductibles that do not warrant their own column on this fund.

Depreciation. Feeds from the quantity surveyor's tax depreciation schedule — Division 40 plus Division 43, the current year's deduction only. Capital improvements added to the cost base for CGT purposes do not belong in this column.

InterestLRBA. The interest figure from the LRBA loan statement, deductible at the rental schedule. Principal repayments are balance-sheet movements and stay out of the P&L row.

NetIncome. Gross income less all deductible expense columns. This is the SAR Section F figure for the property before fund-level adjustments, and what the auditor reconciles back to the fund's accounts.

The audit-only columns. RelatedPartyFlag, ArmLengthEvidence, SourceDocCount, and BankReconCheck distinguish the SMSF pack from a generic landlord ledger. They are not in the SAR; they are in the spreadsheet so the auditor can read them and the practitioner can see at a glance whether the row is defensible.

• RelatedPartyFlag. Y or N at the property level. Y if there is a related-party tenant, a related-party PM, or a related-party trade contractor anywhere on the file for the year. The flag drives the depth of arm's-length testing the auditor will apply.
• ArmLengthEvidence. A one-line note on what evidences arm's-length terms for the flagged transaction: the date of the independent rent appraisal, the comparable PM agreement reviewed, the three-quote comparison on the related-party trade invoice. An empty cell on a flagged property is an audit-stop.
• SourceDocCount. The number of source documents tied to this property for the year. A residential property with a property manager will typically have monthly PM disbursements (12), four to six rates and water bills, four BC or OC notices, a depreciation schedule, an insurance certificate, and a handful of trades invoices — well above twenty. A row showing twelve months of rent against two source documents is a pack with missing months.
• BankReconCheck. Y or N. Y means every rent receipt traces to the SMSF bank account and every expense payment originates from the SMSF account. N means at least one transaction is on the wrong side of the SMSF bank line, and the recon notes carry the exception.

This is both the SMSF property invoice extraction spreadsheet and the SMSF rental income expense ledger spreadsheet — one structured file feeding the audit pack and the SAR rental schedule from the same source documents.

How the Spreadsheet Feeds the SAR Rental Schedule

The per-property spreadsheet is the working file behind the SAR rental schedule SMSF property entries. The SMSF Annual Return aggregates rental data at the fund level; the spreadsheet preserves the per-property detail the auditor tests, and the same source-of-truth file feeds both. The document inventory is one half of the audit-pack story; the SAR mapping is the other.

SAR Section F (Income — Net rental property income). Gross rental income on Section F is the sum of the GrossIncome column across every property the fund held in the FY. Total rental property deductions are the sum of every deductible expense column for every property (CouncilRates through OtherExpenses) plus Depreciation plus InterestLRBA. Net rental income is the difference and reconciles to the fund's accounts at the rental-property line; any variance has to be explained to the auditor before lodgement.

SAR Section H (Total deductions / expense lines). The fund's total deductions split between the property-related deductions feeding the rental schedule and the fund-level deductions that sit outside the property pack. Auditor fees, ASIC fees, the supervisory levy, accounting fees, and bank fees not allocable to a property are all fund-level. The SMSF property compliance pack feeds only the property-related lines; the fund administrator stitches the rest from the fund's general ledger.

A few aggregation points are worth calling out because they recur as audit findings and SAR errors when the per-property file is not disciplined:

• Interest on LRBA aggregates by property, then to the fund. Each LRBA loan statement feeds the InterestLRBA column on its own property's row; the auditor cross-checks per-loan, per-property when sampling. The SAR receives only the aggregate.
• Capital works (Division 43) versus capital improvements. Division 43 capital works deductions are a deductible expense and feed the Depreciation column. Capital improvements, by contrast, are added to the property's cost base for CGT purposes and are not a current-year deduction. A renovation invoice booked in Repairs or Depreciation when it belongs in cost base is an SAR error and a CGT exposure at once.
• In-specie BRP contribution scenario. A member can contribute commercial business real property in specie at market value. Where this happens during the FY, the property is in scope from the contribution date forward; the spreadsheet row carries a partial-year FY and the contribution evidence (contract, valuation, in-specie contribution form) lives in the audit file.
• Pension phase versus accumulation phase. The rental schedule is fund-level and does not split rental income by member account. The actuarial certificate (under the proportionate method) or the segregated assets election is what carries the income-tax-exempt treatment of pension-phase rental income through to the fund-level tax calculation.

Bank Reconciliation: The Audit-Critical Thread

An SMSF holding rental property has only one bank account that should see rent receipts and expense payments — the SMSF's own account, held in the trustee's name as trustee for the fund. Every rent payment from the agent or a tenant must land in that account. Every council rate, water bill, body corporate or owners corporation levy, trade invoice, insurance premium, and LRBA loan repayment must originate from that account. The SMSF property bank statement reconciliation is the test that confirms it, and the single piece of audit work that catches the highest-impact errors in the pack.

The recon as a procedure for the FY:

• Pull the SMSF bank statement for the full year.
• Match each rent line on the statement to the corresponding net-remittance line on the property manager disbursement statement, or — for a related-party tenant paying rent direct — to the lodgement from the tenant under the lease.
• Match each expense payment on the statement to a source document in the inventory: the rates notice, the BC or OC notice, the trade invoice, the insurance premium notice, the loan statement.
• Flag any rent receipted to a non-SMSF account: a trustee personal account, an old non-super landlord account that was never closed, or the agent's trust account where a balance was withheld and not remitted.
• Flag any expense paid from a non-SMSF account: a trustee personal account where the trustee paid on the SMSF's behalf and never produced contemporaneous reimbursement documentation.
• Cross-check every LRBA loan repayment against the LRBA loan statement so the fund's interest and principal lines reconcile to the lender's record.

The agent's trust account is a separate world the SMSF intersects without sitting inside. The fund is a beneficial owner in the agent's three-way trust ledger, and the agent's own Australian real estate trust account three-way reconciliation discipline is what makes the disbursement statement to the SMSF reliable in the first place. Where the agent's three-way recon is sound, the SMSF's bank-side recon is matching the agent's net remittance to the SMSF's deposit, one period at a time. Where it is unsound, the disbursement statement carries unexplained variances that surface in the SMSF's reconciliation as unmatched lines.

Misallocation patterns the recon catches in practice:

• Rent paid into the trustee's personal account because the tenant's autopay was set to the wrong BSB. The trustee transfers the rent to the SMSF account once a month in a bulk sweep. The SMSF books rent at the date of transfer rather than the date of receipt, the bank recon shows monthly bulk transfers from a personal account, and the auditor reads a mixed-account flow that the SMSF account cannot evidence cleanly on its own. Sole purpose test exposure even though the rent eventually arrives.
• A trade invoice paid by the trustee personally because the SMSF account was low on funds. With no contemporaneous reimbursement record, the spend reads as a member loan from the trustee to the fund — a contravention risk under s65 even though the underlying expense is legitimate. The fix is contemporaneous documentation of reimbursement, not retrospective reconstruction.
• Rent collection by the agent that was never remitted because the agent withheld for an outstanding repair. The SMSF books gross rent received and a repair payable, not the net the agent remitted. Where the SMSF books only the net, the gross income figure on the SAR is understated and the repair expense is missing.

The BankReconCheck column on the per-property spreadsheet is binary and unforgiving. Either the reconciliation passes — every receipt and payment ties to the SMSF account, with documented reimbursement where a transaction temporarily sat elsewhere — or it does not.

Three Extraction Routes by SMSF Complexity

The right extraction route is a function of property count, transaction volume, related-party complexity, and the number of SMSFs the practitioner is responsible for. The compliance pack content is the same on every route. What changes is the working rhythm.

Route 1 — Single-property annual manual assembly. The DIY trustee, or the small accountant with one property-holding SMSF on the book. The cycle is annual. Documents go into a folder organised by document type — rates, water, BC or OC, PM disbursements, trade invoices, insurance, LRBA loan statements, bank statements — and the income and expense numbers transcribe into a per-property row using the schema. The bank reconciliation runs once at year-end. The depreciation schedule attaches as-is. Where there is a related-party transaction, the arm's-length evidence note goes in writing on the file. The bundle goes to the auditor. This route works for one property and a small handful of transactions; two properties already pushes the year-end cycle into uncomfortable territory.

Route 2 — Multi-property year-round bookkeeping with monthly extraction. The SMSF accountant or specialist administrator with one fund holding three to ten properties, or a small portfolio of funds. The cycle is monthly. Each month the new PM disbursement statement is extracted into the spreadsheet, any new rates or water bills are extracted, the BC or OC notice (where issued that month) is extracted, and trade invoices for the period flow in. The bank reconciliation runs monthly, and discrepancies are caught in the period rather than at year-end when the trail is colder. By the end of the FY, the spreadsheet is ninety percent ready: aggregating the twelve monthly extracts into the SAR rental schedule numbers is a query, and year-end is a review rather than a build.

Route 3 — SMSF firm scale: batch extraction across the client book. The SMSF administration firm with 100 to 200 property-holding SMSFs on the book, or the SMSF audit firm running fieldwork across a similar volume. The cycle is daily or weekly. A single extraction prompt handles the same per-property schema across every PM disbursement, rates notice, BC or OC contribution notice, water bill, and trade invoice that arrives in the period. The audit-only columns — RelatedPartyFlag, ArmLengthEvidence, SourceDocCount, BankReconCheck — populate per fund automatically based on the prompt's classification rules. Year-end consolidation is a per-fund pivot from a unified ledger; the bottleneck moves from data entry to review. This is where prompt-based extraction across a heterogeneous document mix earns its place — and where AI-powered invoice and statement extraction for SMSF audit packs becomes the operational answer rather than a marginal efficiency, because the SMSF accountant property compliance pack client volume is the constraint, not the document complexity.

For Route 3 firms, prompt-driven extraction across the heterogeneous document mix — PM disbursements from PropertyMe, PropertyTree, and Console; rates notices from every LGA the book covers; BC and OC contribution notices in their state-specific shapes; water bills, insurance certificates, and trades invoices — produces the per-property schema consistently across every fund. The same prompt produces the same structured row whether the period's batch is a dozen documents from one fund or several thousand across the firm's full book, with batches up to 6,000 files and single PDFs up to 5,000 pages handled in one extract.

Common Errors With Invoice-Level Examples

The errors below recur across SMSF audit files and turn into Audit Contravention Reports more often than abstract guidance suggests. Each one reads on a real document, and each one has a column on the per-property spreadsheet that should have caught it.

Repair characterised as an improvement under an LRBA, or vice versa. A trades invoice for "kitchen renovation including new cabinetry, benchtops and appliances" booked in Repairs and paid from the LRBA-funded SMSF account. The invoice description does the auditor's work — the scope is improvement, not repair, so s67B is breached if borrowed funds funded the spend. The contrast is a like-for-like dishwasher replacement, where the invoice reads "supply and install replacement dishwasher, model X for model X" and the spend sits cleanly in Repairs. The fix is to read the trades invoice for what it actually describes before deciding which column it belongs in, and to fund any improvement from the fund's own non-borrowed cash with a separate documentary trail.

Related-party rent below market with no documented review. A business real property leased to the member's medical practice at $36,000 per annum when the comparable market rent is $52,000, with no rent appraisal in the file and no rent review correspondence. Even where the lease is otherwise compliant on paper, s109 is breached, and the ArmLengthEvidence column is the column that should have caught it. The fix is an independent rent appraisal at lease commencement and at every rent review, plus a documented rent review process the auditor can read.

Rent paid into the trustee's personal account. A direct-debit autopay from a residential tenant set to the trustee's personal BSB, transferred to the SMSF account once a month by the trustee. The SMSF books rent at the date of transfer rather than the date of receipt, the bank reconciliation shows monthly bulk transfers from the trustee's account, and the auditor reads a mixed-account flow the SMSF account cannot evidence cleanly on its own. The fix is to correct the tenant's direct-debit details to the SMSF account and document the change; retrospective reimbursement does not undo the prior-year exposure.

Missing bare trust deed. An LRBA-funded property in the pack with the loan agreement and the contract of sale on file, but no executed bare trust or Custodian deed. The s67A structure is incomplete at law; the auditor cannot sign off the LRBA. A pre-acquisition documentary error that surfaces every year afterwards until it is fixed — and fixing it after settlement is structurally awkward, often requiring rectification deeds and tax-office engagement.

Missed annual market valuation. The fund's accounts use last year's market value because no objective and supportable valuation was obtained during the FY. SISR 8.02B is breached, and the AUASB GS 009 direction on alternative valuation methods is exactly what the auditor will read when scoping the finding. With 2026 commentary tightening expectations on desktop estimates, a stale RP Data report is increasingly thin evidence on a fund with related-party leases or LRBA structures.

Capital improvement booked as a repair. A trades invoice for an outdoor entertainment area: "new pergola and decking, includes excavation and concrete footings, new outdoor kitchen with built-in barbecue and benchtops". The new structure is a capital improvement — deductible (if at all) over decades through Division 43 capital works, and added to the cost base for CGT purposes — booked as a Repairs deduction in the year incurred. Recurring finding when the trades invoice description is read for what it actually describes rather than what the trade categorised it as on the invoice header.

Strata insurance certificate without separate landlord insurance. The strata scheme insures the building under the OC's master policy, but no landlord insurance covers the contents, the lot owner's public liability, or rent default. The sole purpose test exposure is muted, but arm's-length asset-protection prudence is the auditor's concern, and the certificate-of-currency line in the inventory is what should have surfaced the gap. The fix is a landlord insurance policy in the SMSF's name covering the lot owner's risks the strata policy does not.