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Jun 08, 2022

In Specie Transfer from Family Trust to SMSF

in SMSF Technical Forum

Hi, I have a client who has asked if they can transfer listed shares in specie from a family trust in to the SMSF and allocate it as a NCC to the SMSF member who is also a beneficiary of the family trust.

I suggested it may be more justifiable if the member had an unpaid entitlement or loan in the family trust so clearly it is money they are entitled to but what are peoples thoughts?

3 answers0 replies

Comments (3)

THE AUDITORS INSTITUTE

Jun 10, 2022

Hi CV

I will look into this further and come back to you with further details.

Thanks

SMSF AAA

Jun 09, 2022

Thanks, if it is saying it can be made on behalf of the member then isn't this actually supporting the fact the family trust can make it if it was a unpaid entitlement or loan being cleared from the family trust?

THE AUDITORS INSTITUTE

Jun 09, 2022

Hi CV

My view is that a NCC technically cannot be made from a Family Trust to a SMSF. A NCC needs to be made by the member (or by the spouse of the member). To do what is being proposed the shares should be transferred from the Family Trust to the individual and then from the individual to the SMSF.

The trustees need to consider the requirements of SIS Regulation 7.04.

Further a member contribution is defined at SIS Regulation 5.01:

"member contributions, in relation to a member of a regulated superannuation fund, means contributions by, or on behalf of, the member to the fund, but does not include employer contributions made in respect of the member."

The Division 7A tax rules are complicated so any transfers from a Family Trust should have the tax impact reviewed.

Thanks

SMSF AAA