Islamic finance specialist launches ‘Halal SMSF’

Meezan Wealth Management, a Sydney-based Islamic financial services provider, has announced the launch of its Islamic self-managed super fund (SMSF) that promises “a religious, ethical and tax efficient win-win-win” financial solution for Australian Muslims.

Named the ‘Al-Mustaqbal Islamic SMSF’, the property-focused fund promises a Musharakah (Islamic finance principles) compliant superannuation solution for Muslim Australians.

The new SMSF ensures that money borrowed to buy a property and placed into the SMSF is repaid as rent and dividends rather than interest. Islamic, or Sharia, principles forbid the payment of interest on borrowed funds.

The fund is particularly geared for investors who want to pool funds to buy property via an SMSF arrangement.

According to Meezan, members of the Islamic community in Australia, which is approaching one million people, overwhelmingly preferred to invest in property over any other asset class “because of its physical nature and history of steadily increasing value”.

Meezan Wealth Management founding director Rokibul Islam said that the Islamic SMSF offers a number of unique benefits to Sharia-compliant investors.

Firstly, noting the challenges of purchasing property in Australia, and particularly in Sydney, he said many Australian Muslims struggled to come up with the needed 20% deposit.

“Because a single SMSF can have up to six members, family and friends could pool their money to get a Sharia-compliant loan and buy an investment property held in an SMSF which they jointly control.”

“Using this approach, Muslim investors could develop a property portfolio for long-term capital growth,” he said.

Islam added that the amount that people can borrow “is not determined by their income but rather by the size of the regular employer compulsory and voluntary personal contributions to the SMSF fund”.

“Rent from the property would be taxed at a flat 15% rather than higher personal income or company tax rates and when the property is eventually sold for a greatly increased price it will be tax free as it will be free of capital gains tax,” he said.

Islam added that the Islamic SMSF solution had been well received by medical and other professionals of the Islamic faith, expecting strong interest to also be shown from skilled migrants and Islamic family members who wanted to pool funds in an SMFS to buy property.