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Dear All, I have a new SMSF Audit Client, The Director of Corporate Trustee accidently bought shares in personal name using SMSF's Funds. Further they have received dividends as well. Has anyone come across this type of situation and what the trustee can do to rectify the situation. Appreciate any guidance, Thank you Anand
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Hi Anand
If the shares were meant to be owned personally then a way to rectify it is to treat the amount (cost price of shares less dividends received) as a debtor (loan to member) and get the amount repaid.
Depending on the amount / circumstances you would qualify your audit report in relation to section 65 and lodge an auditor contravention report. Other sections to consider are sections 82 - 85 of SIS re the in-house rules & regulation 4.09A re assets of the Fund to be held separately from assets held personally.
If the shares were meant to be purchased by the Fund but incorrectly put in personal name then the ownership would need to be transferred to the Fund.
Thanks
SMSF AAA