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ATO Interpretative Decision

ATO ID 2002/377

Superannuation

Retirement income entities - acquisition of assets from members
FOI status: may be released

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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Has a contravention of section 66 of the Superannuation Industry (Supervision) Act 1993 (SISA) occurred where the superannuation fund purchased unlisted shares from a member?

Decision

Yes. A contravention of section 66 of SISA has occurred.

Facts

The trustee of a superannuation fund purchased shares in a company from a member of the fund.

The company's shares were unlisted.

Reasons for Decision

Section 66 of the SISA generally prohibits acquisitions of assets from members of regulated superannuation funds. Listed securities are one exception to this general prohibition.

Listed security is defined in section 66(5) of the SISA as:

'(a)
a share;
(b)
a unit;
(c)
a bond or debenture;
(d)
a right or option; or
(e)
any other security;
listed in the official list of a stock exchange in Australia, 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 Act 2001.'

The company shares do not meet the definition of 'listed security' under section 66(5) of the SISA. Therefore, the purchase of the member's shares in the company by the fund is a contravention of section 66 of the SISA.

Date of decision:  28 November 2000

Legislative References:
Superannuation Industry (Supervision) Act 1993
   Section 66
   Subsection 66(5)

Income Tax Assessment Act 1936
   Section 470

Corporations Act 2001
   Section 771

Keywords
Self managed superannuation funds
SMSF acquisition of assets
SMSF breach of compliance
SMSF listed securities
SMSF investments

Business Line:  Superannuation

Date of publication:  28 March 2002

ISSN: 1445-2782

history
  Date: Version:
You are here → 28 November 2000 Original statement
  31 March 2006 Archived

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