Off-market transfers between SMSFs and related parties

To enhance transparency and strengthen the integrity of the self-managed super funds (SMSFs) system it is proposed to require SMSFs that dispose or acquire assets from a related party, to conduct the transfer through an underlying market. Where an underlying market doesn't exist, the transfer will need to be made at a price determined by a qualified independent valuer.

The proposed amendments will apply in cases where an acquisition from a related party is permitted. In many cases, SMSF trustees and investment managers are prohibited from acquiring assets from related parties. However, there are exceptions, such as listed securities, business real property and certain in-house assets acquired at market value.

Transfers of listed securities will be the transaction most commonly affected by the requirement to use an underlying market. Currently, shares can be transferred to and from a related party off-market. Under the proposed amendments, listed securities must be sold on and purchased through the market or exchange.

Any increased transaction costs due to this measure will only be incurred by SMSFs that choose to enter into related-party transactions.

This is part of the Stronger Super suite of measures.

Media release

For more information, refer to media release no. 074, Stronger Super - Self Managed Super Fund Reforms, issued on 10 May 2011 by the Assistant Treasurer and Minister for Financial Services and Superannuation.

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