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Jean Rey

May 26, 2022

in SMSF Technical Forum

Hi SMSFAAA Team,

One of the fund I am auditing transferred shares from the member to the SMSF. The off market transfer form is dated March 2021 (price $0.98/share) but the share registry from Investor Centre is dated June 2021 (price on that date $1.19/share).

The transfer has been recorded against contributions (price used is the price from March 2021). I questioned the accountant and he told me that the trustees tried to transfer the shares from March but that the process took time. I never transferred shares myself so I am not aware of the time it could take.

From my understanding the value that must be used on the off market transfer is the market value of the stock on the day of execution of the off market transfer form (or the day that you do everything needed to transfer the stock if done electronically). Therefore, it is not the day that the share registry registers the transfer but it is the contract date (from the off market transfer form) which is relevant. Therefore I believe that using the price from March 2021 is correct but could you give me your opinion?

If you disagree, what would be the implications for the audit?

Please let me know.

Thank you in advance.

Yours sincerely

Jean Rey

1 answer0 replies

Comments (1)

THE AUDITORS INSTITUTE

May 29, 2022

Hi Jean Rey

Thanks, yes the trustees must comply with the acquisition of asset from related party rule (section 66 of SIS) & the arm's length rule (section 109 of SIS).

TR 2020/1 "Income tax: superannuation contributions" provides guidance and states:

"A superannuation provider acquires the beneficial ownership of shares or units in an Australian Stock Exchange listed company or unit trust when the provider obtains a properly executed off-market share transfer in registrable form."

Also refer:

"Example 7 – when in specie contribution of shares is made

85. On 26 June 2009, Cheung signs an off-market share transfer form to effect a contribution of shares from herself to Cho Pty Ltd, the trustee of her self-managed superannuation fund. However, Cheung leaves certain parts of the form blank for completion by her stock broker, as her shareholdings, and those of Cho Pty Ltd are broker sponsored. Cheung posts the transfer form to her broker on the same day. 86. Cheung’s broker adds the omitted information on 2 July 2009 and completes the transfer through CHESS. Cho Pty Ltd is registered as a shareholder on 5 July 2009. 87. Cheung’s contribution will be made on 2 July 2009 as it is not until that day that the relevant transfer has been completed to registrable form."

The contribution & its value is the date the transfer form is completed. If the form was completed on say 15 March 2021 the value of the contribution would be the value of the shares at that date.

Thanks

SMSF AAA