The Australian Taxation Office published a new ruling, SMSFR2010/1 on 25 February 2010 that explains the Commissioner’s views on the application of superannuation laws to the acquisition of an asset by a self-managed superannuation fund (“SMSF”) from a related party. The ruling replaces a previous draft ruling published on 2 April 2008.

Under superannuation law, a trustee or investment manager of a SMSF is prohibited from intentionally acquiring assets (other than money) from a related party of the SMSF, unless an exception applies. There are various exceptions which allow a trustee or investment manager to accept money or to acquire listed securities, business real property, certain in-house assets and certain assets specifically excluded from being in-house assets.

The Ruling explains certain requirements of the exceptions. It also clarifies that a trustee or investment manager accepts money from a related party if the substance of the transaction is to directly transfer funds held by the related party to the SMSF.

The Ruling attempts to define the scope of the term ‘acquire an asset’ including characterising what is acquired and the acceptance of money by a trustee or investment manager. It includes guidance on characterising what is acquired and considers the performance of a service and the acquisition of rights arising under a contract – for example, an option agreement.

For more information contact Bright Law.