This article is more than 24 months old and is now archived. This article has not been updated to reflect any changes to the law.
The broad rule is that trustees of self-managed funds must not acquire assets from related parties. Those related parties include:
The broad rule is in Section 66(1) of the SIS Act [1]
There are currently four notable exceptions to the broad rule. The exceptions allow the transaction:
These exceptions are in Section 66(2) of the SIS Act.
Also, the Tax Commissioner may create further exceptions.
The FLA allows superannuation interests to be allocated between parties to a marriage. This may occur through an agreement or by order of the Family Court.
If a marriage breaksdown, then a spouse wishing to transfer or roll over their superannuation interests to another fund for the benefit of their partner, must do so in the form of a cash payment. This ensures that the current related party transaction rules in the SIS Act are not breached.
The Tax Commissioner recognised that many small superannuation funds do not hold sufficient cash to make these "marriage breakdown" payments. In that light, the Tax Commissioner has created a new exception to the related party transaction rules in the SIS Act.
The new changes allow trustees of superannuation funds to transfer and acquire a spouses' interest in a superannuation fund without infringing the related party transaction rules of the SIS Act.
The transfer allowed by the new change must be made on the following conditions:
The exception is contained in the Tax Commissioner's determination dated 26 August 2006. You can read it there. Or for more information, you can call Julian Smith at Maddocks on 03 9288 0555.
[1] Superannuation Industry (Supervision) Act 1993 (Cth)
Qualifications: LLB (Hons), BEc (Hons), Monash University
Leigh is a Partner in Maddocks Tax and Structuring team. Leigh has extensive experience in advising Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.
Leigh regularly provides advice on:
His advice covers both direct and indirect tax considerations.
Throughout his career, Leigh has been at the forefront in developing tax-effective corporate, trust and superannuation structures.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.