ATO Interpretative Decision
ATO ID 2004/230 (Withdrawn)
Superannuation
Water licences - acquisition of a tradable water right from a related party of a Self Managed Superannuation Fund.FOI status: may be released
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This ATO ID is withdrawn as it is superseded by SMSFR 2009/1 Self Managed Superannuation Funds: business real property for the purposes of the Superannuation Industry (Supervision) Act 1993.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 self managed superannuation fund (SMSF) acquire a tradable water right from a related party of a SMSF pursuant to subsection 66(2) of the Superannuation Industry (Supervision) Act 1993 (SISA)?
Decision
No, a SMSF cannot acquire a tradable water right from a related party of the superannuation fund pursuant to subsection 66(2) of the SISA.
Facts
A related party of a SMSF owns a tradable water right.
The SMSF wishes to acquire the tradable water right from the related party.
Reasons for Decision
Subsection 66(1) of the SISA expressly prohibits a superannuation fund from intentionally acquiring an asset from a related party of the fund unless an exception within subsection 66(2) of the SISA is satisfied.
Subsection 66(2) of the SISA provides the following exceptions to the general rule:
...listed securities acquired at market value; or
if the fund is a superannuation fund with fewer than 5 members - the asset is business real property acquired at market value; or
the trustee of a regulated superannuation fund acquired the asset under a merger between regulated superannuation funds; or
the asset is of the kind which the Regulator, by written determination, determines may be acquired...
As the tradable water right does not meet the requirements of any of the exclusions provided by subsection 66(2) of the SISA it cannot be acquired from a related party.
It should be noted that subsection 66(2A) of the SISA may allow for the acquisition of the tradable water right where the asset is an in-house asset and its acquisition does not result in the level of in-house assets held by the fund exceeding the level permitted by Part 8 of the SISA.
Date of decision: 19 March 2004Year of income: 2001
Legislative References:
Superannuation Industry (Supervision) Act 1993
section 66
subsection 66(1)
subsection 66(2)
subsection 66(2A)
subsection 66(5)
section 71
section 83
Regulation 16B Related ATO Interpretative Decisions
ATO ID 2004/229
ATO ID 2004/231
Keywords
Self managed superannuation funds
SMSF acquisition of assets
SMSF arms length acquisitions
SMSF business real property
SMSF related parties
ISSN: 1445-2782
| Date: | Version: | |
| 19 March 2004 | Original statement | |
| You are here | 8 May 2009 | Archived |