I am currently facing a similar situation where an off-market transfer is feasible at a cost of $50 per share parcel. Any capital gains may be disregarded upon completion of the off-market transfer. However, it's important to note that the current position potentially breach s.52(2)(d) or R4.09A. To rectify the situation, the transfer needs to be made from my personal account to the trading account of the trustee company.

Ownership of the shares sould be changed to the correct name . In the meantime you should obtain a declaration of trust confirming that the shares were held on behalf of the Fund and were purchsed using Fund monies

Hi Debra

The issue you raise is similar to recent queries.

Re the CGT issue my view is that if the Fund was the actual owner of the shares but they were recorded in the incorrect name there will not be a CGT event (i.e. no deemed disposal) if the shares are transferred to be in the name of the trustee company in trust for the Fund.

My view is that generally most auditors would argue that there is a breach of SIS regulation 4.09A as the shares have not been registered in the name of the company in trust for the Fund but have been instead registered in the name of the Fund members.

Regulation 4.09A of SIS requires that:

"A trustee of a regulated superannuation fund that is a self managed superannuation fund must keep the money and other assets of the fund separate from any money and assets, respectively:

(a) that are held by the trustee personally; or

(b) that are money or assets, as the case may be, of a standard employer-sponsor, or an associate of a standard employer-sponsor, of the fund."

The ATO gives guidance on Regulation 4.09A of SIS & states at:

www.ato.gov.au

Guidance on the minimum expectation of audit checks and evidence for SMSF auditors.

"The auditor should obtain evidence that the fund’s money and assets are held separately from money and assets held personally by the trustees or a standard employer-sponsor by:

· sighting asset ownership documents, including bank statements, to verify SMSF assets are held in the name of trustees on behalf of the fund (for example, R & J Smith as trustees for the Smith SMSF or R Smith Pty Ltd as trustee for the Smith SMSF) and not in the name of the trustees alone

· where State law prevents ownership in the SMSF’s name, checking for alternative documentation that protects the fund’s assets (for example, a valid declaration of trust)

· reviewing transactions on bank statements to ensure fund money is not mixed with money belonging to related parties of the SMSF.

Where there has been a change in trustees, the auditor should obtain evidence that ownership documents reflect the change."

The SIS regulation 4.09A does refer to "held by the trustee personally". Again generally in my view most auditors see this reference as relating to individual trustees or to directors of a trustee company.

Lawyers have argued that "there can't be a contravention of regulation 4.09A where there is a corporate trustee - as companies cannot hold assets personally".

An article that covers this can be found at:

https://www.professionalplanner.com.au/2016/04/the-nitty-gritty-of-holding-assets-in-an-smsf/ 

It is best practice (& what the ATO expects) that SMSF assets are held in the name of the trustee or trustees on behalf of the Fund.

If other forum members have a view on this issue please let the forum know.

Thanks

SMSF AAA