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David Amos

Nov 23, 2023

in SMSF Technical Forum

Have come across a fund contemplating a unit purchase in a unit trust:

Client A and Client B are shareholders in a company that operates a business. They own 40% of the shares each and have other non-related shareholders that make up the remaining 20%.

Client A owns the premises that the business operates out of through a unit trust that has debt against it. The current unit holder of the unit trust is 100% client A’s family trust. Approximate value $1.2m Current loan against the property $600k.

Client B would like to use his SMSF to purchase units in the unit trust and share in the ownership of the property.

Question is around whether or not Client A and B count as related parties under Part 8 of the Act.

Obviously we do not want it to be counted as an in house asset as Client B would not satisfy the 5% test.

1 comment

Comments (1)

Con Gotsis

Nov 24, 2023

Dont think Client A and B are related parties solely by virtue of the shareholding in the business. Question could be raised whether Client A has sufficient influence over Client B in the unit trust but otherwise I dont see a problem.