I would appreciate your help and advice to resolve questions regarding the following arrangement:

1. The Accountant is a Sole Director of the XYZ Pty Ltd [unlisted];

2. The XYZ Pty Ltd is pooling funds from other investors, including other SMSFs;

3. The XYZ Pty Ltd lends money to the another company and there is an Agreement between the XYZ Pty Ltd [lender] and the Borrower(s), specifying the rate of receivable Interest as Bank Cash rate [variable] plus Margin [fixed];

4. There are no Income agreements in place between the SMSFs and the XYZ Pty Ltd;

I was presented so far with the accounts of two SMSFs: ABC SMSF & DEF SMSF.

ABC SMSF

1. ABC SMSF financials indicate an investment of 50 Class G shares $2,000 each totalling to $100,000 in the XYZ Pty Ltd;

1. The ABC SMSF Income received from XYZ Pty Ltd is classified as an Interest, not the Dividend and is a fixed percentage of the Interest income received by the company from the Borrower:

2. $5,693.88 Interest total paid for the 2021 year in 12 monthly payments; i.e. at app. 5.67% on $100,000 value of shares invested;

3. Interest paid to the ABC SMSF is recorded in the XYZ Pty Ltd in the Management fees Income account;

   1. the balance of this account represents a Net amount:

i. of the company’s Interest income earned on Loan(s)

after

ii. deducting payments to the investors [like ABC SMSF];

1. Quarterly statements issued by the XYZ Pty Ltd to ABC SMSF advising of the payments.

1. ABC SMSF

2. Has also shares in the same XYZ Pty Ltd - but the 50 H Class shares at $2,000 each totalling also to $100,000;

3. No income has been paid to the DEF SMSF in the same 2021 year on these shares.

And the same issue - Income received at 8% on the value of the Units from the Unrelated Unit Trust recorded as an Interest income.

In this case - the trust is recorded as the Listed Unit Trust; however this should be confirmed.

Are there issues how the income has been been derived and recorded? Not as dividends on shares adn Distribution on units, but as an Interest at a certain percentage based on shares and units values?

Any breach of SISA?

Thank you.