ATO Interpretative Decision
ATO ID 2002/699
Superannuation
Retirement income entities - Business Real Property - fishing licenceFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a licence to harvest seafood qualify as business real property (BRP) as defined in the Superannuation Industry (Supervision) Act 1993 (SISA)? If it qualifies, can the licence be acquired by the Self Managed Superannuation Fund (SMSF) from a related party?
Decision
No. A licence to harvest seafood does not qualify as BRP under SISA and the SMSF cannot therefore acquire this from a related party without contravening SISA.
Facts
The employer-sponsor of the SMSF currently owns a licence to harvest seafood.
The SMSF had previously purchased a similar licence to harvest seafood.
The trustees of the SMSF wish to acquire the licence to harvest seafood from a related party, the employer-sponsor (the employer sponsor is a related party of the fund under section 10 of the SISA).
The relevant State Government has issued a limited number of these particular licences. These licences can be purchased on the open market.
Reasons for Decision
Subsection 66(1) of the SISA prohibits the trustee or investment manager of a regulated superannuation fund from intentionally acquiring an asset from a related party of the fund. This general prohibition is subject to certain exceptions set out in subsection 66(2) of the SISA. The exceptions are assets where the asset is:
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- listed security acquired at market value; or
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- BRP acquired at market value; or
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- an asset acquired under a merger between regulated superannuation funds; or
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- an asset of a kind which the regulator has stated, by written determination, may be acquired by the fund or a class of funds in which the fund is included.
Listed securities are defined in subsection 66(5) of the SISA to be a share, a unit, a bond or debenture, a right or option or any other security listed on an official stock exchange in Australia or an approved stock exchange within the meaning of section 470 of the Income Tax Assessment Act 1936 or an exempt stock market within the meaning of section 771 of the Corporations Law.
Business real property is defined in subsection 66(5) of the SISA. Essentially it is any real property used wholly and exclusively in one or more businesses, but does not include any interest held in the capacity of beneficiary of a trust estate.
As the licence to harvest seafood does not come within the definition of BRP (or any of the exceptions set out in subsection 66(2) of the SISA), the SMSF is prohibited under the SISA from acquiring the asset from the related party (in this case the employer sponsor).
Date of decision: 23 July 2001
Legislative References:
Superannuation Industry (Supervision) Act 1993
subsection 66(1)
subsection 66(2)
subsection 66(5)
section 470 Corporations Law
section 771 Related ATO Interpretative Decisions
This decision replaces ATO ID 2001/305.
Keywords
Self managed superannuation funds
SMSF investments
SMSF acquisitions of assets
SMSF business real property
SMSF listed securities
SMSF related parties
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 23 July 2001 | Original statement |
| 8 May 2009 | Archived |