[The Auditors Institute Ltd]

Hello Rick

Thanks for an interesting question.

As Peter raised, it does not make sense commercially for the partnership to cash out to a partner (the SMSF) an unrealized gain amount.

Having said that, assuming this is a tax law partnership that only holds a property and a bank account, the return of cash is presumably a return to the SMSF partner of what is already the partner’s asset (an interest in the bank account).   So long as there is not suggestion that the SMSF now has a loan to the other partner/partnership, I do not see this as giving rise to a breach of the SIS Act/something that is reportable in an ACR.

Best regards

The Auditors Institute