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Grant Cooper

May 05, 2022

Part 8 Associate and Divestment of In-House Asset

in SMSF Technical Forum

Is it possible to conclude that a company 'is not' a related entity where an SMSF holds a share investment in a company (less than 10% of the company's share capital in this instance) and has also provided a loan to the same company (equating to less than 10% of the fund's assets) and a member of the fund is one of five Directors in the company?

Secondly, if it is concluded that in the above scenario that the company 'is' a related entity, does the fact that the member resigned his directorship (subsequent to the investment in shares and the loan, i.e. the member was a director at the time the investment/loan was made but has since resigned) validate these investments (and they can be retained by the fund), or are they forever tainted and need to be divested from the fund where they are more than the 5% in-house asset limit?

Thanking you in advance

2 answers0 replies

Comments (2)

Grant Cooper

May 10, 2022

Thank you very kindly in relation to your comments. My inclination is that the investments are not related party given the director mix, and therefore resigning as a director really has no effect which was my concern. I will be able to draft some commentary in the mangement letter - thanks again for your help. Regards Grant.