Hi Team,
The SMSF has invested in ESS many years ago which were sold off in FY2023 at higher than market value and also appeared to have a share purchase loan attached to this in their personal name. Further, there is no evidence that the
ESS were held in the name of the SMSF.
Please refer attached for context.
Questions:
Would this be a breach of r4.09A and any others even if sold in FY2023 and sale proceeds received by the SMSF?
Would NALI provisions apply given the sale at a higher market price?
Looking forward to your views.
Many thanks!
Yuvraj
Hi Yuvraj
Yes if the shares are held in their personal name and no reference to the Fund this would be a breach of SIS Regulation 4.09A.
Other sections that arguably have been breached are:
Section 109 of SIS in that the shares are being acquired at a value greater than their market value so investment transactions are not being made on an arm's length basis.
Regulation 13.14 of SIS in that there may be a charge over a Fund asset as you note that there is a personal share purchase loan in place.
Yes the NALI provisions should apply if the shares are sold at a value greater than their market value.
Thanks
The Auditors Institute