• Investment options in PS LA 2010/4

    PS LA 2010/4 sets out three investment options, as follows:

    • Option 1 - invest the funds representing the UPE on an interest only 7-year loan
    • Option 2 - invest the funds representing the UPE on an interest only 10-year loan
    • Option 3 - invest the funds representing the UPE in a specific income producing asset or investment

    These investment options set out in PS LA 2010/4 are the 'safe harbour' options made available to you. If the trustee chooses to adopt one of these three investment options, then we will consider that the funds of the sub-trust are held for the sole benefit of the private company beneficiary. This means, if the tax affairs of the main trust are selected for an ATO audit, the tax officer will be satisfied that the conditions in PS LA 2010/4 have been met if the trustee is able to demonstrate that the funds have been invested using Options 1, 2 or 3.

    PS LA 2010/4 allows the trustee to enter into an alternative investment agreement as long as the trustee is able to demonstrate that the funds in the sub-trust are held for the sole benefit of the private company beneficiary, as set out in paragraph 55 of PS LA 2010/4. If the trustee decides to implement an alternative investment agreement, the trustee will need to satisfy the tax officer that the conditions in PS LA 2010/4 have been met should the tax affairs of the main trust be selected for a review by us.

      Last modified: 22 Jun 2011QC 24445