Technically Speaking: Can a pre-99 unit trust be converted to a non-geared unit trust?

Recently SPAA sought clarification from the ATO about whether a SMSF can purchase units in a pre-99 unit trust without those units being classified as an in-house asset. Specifically, the question raised by SPAA was as follows:

A SMSF held units in a related geared unit trust as at 11 August 1999 which have been excluded from the fund’s in-house assets under section 71A of the Superannuation Industry (Supervision) Act 1993 (the SIS Act). On or after 28 June 2000 the unit trust satisfies the requirements of Division 13.3A of the SIS Regulations and on or after satisfying these requirements the SMSF acquires additional units in the unit trust which are not covered by the provisions of section 71D or 71E of the SIS Act. Will the purchase of the additional units constitute an in-house asset in the fund?

The contents of this resource are taken to be correct at the time of publication.

Disclaimer: Technical Papers contain factual information only and are prepared without considering particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. The information contained in this document does not constitute advice given by the SMSF Association to you. If you rely on this information yourself or to provide advice to other persons, then you do so at your own risk. The SMSF Association is not licensed to provide financial product advice, legal advice or taxation advice. We recommend that you seek appropriate professional advice before relying upon the information in this technical paper. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this paper is not considered financial advice for the purposes of the Corporations Act 2001. © SMSF Association