Three strangers walk into a bar – SMSF, biodiversity credits and property developers – and become best mates.

I love the creativity of my fellow human beings.

How lateral thinking and self-interest can create whole new vistas to contemplate and explore.

The latest one coming across my desk involves bio-diversity credits.

In essence they are tradeable financial instruments that landholders can gain by investing in restorative land management. That increases the level of bio-diversity and positive nature outcomes on their property. In many cases, they are starting to converge with carbon credits.

And the carbon-fearing chicken littles of environmental collapse and global warming in governments are throwing big money at this.

The optics are good:

• Environmental wins
• Financial support for our rural friends with marginal productive land
• Great PR and feels.

So, how do SMSFs fit in?

In some of the structures I see coming across my desk:

• Property developers are often required to buy biodiversity credits to offset their apparent negative impact on the environment.
• Credits can be costly and apart from allowing the development to continue, add no real felt benefit to the developer.
• Mr Developer, why not set up an SMSF and purchase land that may be suitable to be established as a biobank site?
• SMSF is established, buys suitable land, registers with the authorities under a biobanking agreement, SMSF issued with biodiversity credits.
• As needed, the developer buys credits from the SMSF. 
• What was otherwise a sunk cost, can now provide future retirement benefits to the developer.
• Of course, this does not come without a lot of red tape, and upfront and ongoing costs to maintain the biobank in the SMSF.   

Another example of how SMSFs are being creatively used in the real world.

To discuss your client's SMSF - or to ask me any tricky SMSF questions you may have - just call 1300 874 787 or email audits@trisuperauditors.com.au