ATO Interpretative Decision
ATO ID 2002/598
Superannuation
Retirement Income Entities - Trustee request for written notice determining that an asset is not an in-house assetFOI 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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Will the Commissioner issue a notice under paragraph 71(1)(e) of the Superannuation Industry (Supervision) Act 1993 (SISA) determining that an asset of the self managed superannuation fund (SMSF) is not an in-house asset?
Decision
No. The Commissioner will not issue a written determination determining that the asset is not an in-house asset.
Facts
The trustees requested the Commissioner to make a written determination under paragraph 71(1)(e) of the SISA, deeming an asset not be an in-house asset, in order to allow for the trustees to acquire the asset without contravening the SISA.
The proposed investment comprised units in a unit trust which owns Business Real Property. The unit trust is not a related party of the fund. As the trust does not meet the definition of a widely held trust under subsection 71(1A) of the SISA, which would allow the fund to acquire the investment, the trustees believed they were being adversely treated under the amendments to the SISA which inserted subsection 71(1A) into the Act.
Reasons for Decision
Section 66 of the SISA prohibits the trustee of a regulated superannuation fund from intentionally acquiring an asset from a related party of the fund. Exceptions to this general prohibition are prescribed under subsections 66(2) and 66(2A) of the SISA. Under subsection 66(2A), an acquisition from a related party is not prohibited if it is an investment which the Regulator, by written notice given to the trustee of the fund under paragraph 71(1)(e) of the SISA, determines is not an in-house asset of the fund that is acquired at market value and the acquisition would not exceed the level of in-house assets under Part 8 of the SISA.
The amendments to the SISA inserted by the Superannuation Legislation Amendment Act No 4 1999 included 'investments in related trusts' under the definition of an in-house asset with the intention of restricting such investments for trustees of superannuation entities. The amendments clearly indicate a change in government policy in relation to investments by SMSFs in unit trusts other than widely held unit trusts. The nature of the investment in question is not unusual or unique. There are a multitude of similar investments held by trustees of other SMSFs.
The Commissioner is of the opinion that to issue a notice determining that the investment in question is not an in-house asset would lead to an inequitable situation. Therefore the Commissioner decided not to issue a notice pursuant to paragraph 71(1)(e) of the SISA.
Date of decision: 02 January 2001
Legislative References:
Superannuation Industry (Supervision) Act 1993
section 66
subsection 66(2)
subsection 66(2A)
subsection 71(1A)
paragraph 71(1)(e)
The Act
Keywords
Superannuation fund in house assets
Self managed superannuation funds
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 2 January 2001 | Original statement |
| 22 July 2002 | Archived |