Hello Stephen

Thanks for an interesting question. Thankfully, as fund auditors we are not required to provide opinions as to whether there is a Part IVA risk associated with a contribution and redraw strategy.

For the situation at hand, there does appear to be a breach of the SIS Act because as at 30 June 2021 there are loans to members of the fund – representing the fund’s outstanding tax debt to the ATO.

Whilst appreciating that these loans have since been paid back (so rectification has already occurred), this does not remove the fund auditor’s obligation to lodge an ACR because the fund has failed Test 6 (Where the value of all contraventions is more the 5% of the value of the fund’s total assets) and/or Test 7 (If the value of all contraventions of a section or regulation listed in tables¬†1A and 1B is more than $30,000).

The apparent breaches would be in relation to section 65 (financial assistance to a fund member), and sections 82 and 84 (in relation to in-house assets that are more than 5% of the fund’s total assets).

The Auditors Institute


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