The proposed legal requirement for the acquisition or disposal of self-managed superannuation fund (SMSF) assets between related parties to be executed on market needs revision or clarification when a fund changes its trustees.
"When you change from individuals to a corporate trustee you ring up the broker [for a share transfer] and ask 'can you please change the name?' and they say 'no you're going to have to set up a whole new account in the name of the new trustees'," Institute of Chartered Accountants in Australia head of superannuation Liz Westover told delegates at the professional body's 2012 Business Forum yesterday.
"Guess how you get the shares over to the new [trustee] name? Via an off market transfer.
"So you'd have to think this legislation captures those types of arrangements and we need to make sure there is a sensible approach there."
Westover flagged circumstances where an SMSF might need to be wound up but said a dead bundle of shares or a block of shares that are worthless as also being problematic under the proposed legislation.
"You need to actually get those parcels of shares out before you can wind the fund up. I'm interested to se how the legislation captures those particular types of arrangements," she said.
Despite the fact no draft legislation has been released pertaining to these rule changes they are supposed to come into effect on 1 July this year.
As such, Westover recommended advisers revisit any relevant related party transactions before the deadline.##
"I would suggest to you if you have any clients that need to do in specie contributions that it might be worth you getting them done before the end of the financial year. Do not leave it after or you may find you're restricted in how you actually get those contributions into the fund," she said.
