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Hi Gulshan
If the SMSF is allowed to invest in a Trust from a SIS perspective then yes it can run a business and be a geared Trust.
Thanks
SMSF AAA
Hi Gulshan
A SMSF is only allowed 5% of its assets in in-house assets. An in-house asset (IHA) is defined in SIS under the Part 8 associates rules. Under those rules an entity such as a trust is an IHA if it is majority owned or controlled (refer sections 70B to 70E of SIS). A SMSF can invest in a Trust if it does not majority own or control the trust. Majority own is referred to as owing greater than 50% of the shares or units.
On the basis that the Fund only owns 33% of the units and does not control the trust the SMSF should be able to invest in it.
The IHA & Part 8 associate rules are complicated so they should be reviewed to ensure the trust is not a related party of the Fund / its members. I would recommend getting legal advice to ensure that the IHA rules have been complied with.
Thanks
SMSF AAA