Hello Chris
Thanks for an interesting question.
It is assumed – please correct me if I am wrong – that the SMSF would not have been permitted to directly purchase the shares from the fund members on the basis that (a) the acquisition is from members of the fund and (b) the shares would represent more than 5% of the fund’s total assets if the purchaser went ahead and the shares are not covered by Regulation 13.22C and 13.22D (for example, the shares are not in a company with not borrowings that is not carrying on a business, amongst various other restrictions).
It is also assumed, that at face value, that the shares in the LLC are not being acquired from a fund member or their related party.
As both yourself and Peter have alluded to, the sale of the shares in the Aus entity to the LLC, and then the subsequent acquisition by the SMSF of shares in the LLC, does appear to be a scheme entered into for the purpose of defeating section 66(1) – hence it is likely to be caught by the integrity provision in section 66(3).
Best regards
The Auditors Institute