Awan Hammad

    Hi Mark

    Yes if a SMSF makes an investment in a Unit Trust whether that be a loan or a purchase of units there has to be appropriate paperwork issued at the time of the investment being either a loan agreement or new unit certificates. This is what would be required to meet the requirements of section 109 of SIS the “arm’s length” requirement.

    The Fund is also at risk of the investment being treated as NALI (non-arm’s length income) if the transactions has not been done on an arm’s length basis.

    Any investment in the trust would also need to consider the in-house asset rules.

    If the trustees do not provide appropriate documentation there may also be a breach of section 35C(2) of SIS that requires:

    “The trustees must provide the auditor with the necessary documents to complete the audit in a timely and professional manner; and within 14 days of a written request from the auditor”.




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