Dear All,

Hope all of you are well.

I am currently auditing a Fund, which has invested in an unlisted unit trust, being XYZ investment unit trust 1. Noted that the trust has declared 2 interest payments for FY2023, one of $3,682.19 for the 80 units & $7,068.49 for the 100 units held by the SMSF. However, those payment were not accrued in the Fund's book as of 30 June 2023. As advised by the Fund's accountant, "The SMSF has adopted the cash basis and recognized income in the year in which it is actually received. The interest's income will only get paid at maturity date which is beyond the 12-month period (24 months. If the interest was realized and the SMSF will not receive it after 24 months and the review timeframe has passed for amendment, the taxpayer may suffer the unjust tax liability. To not make the SMSF being liable for income tax where the economic benefit has been deferred, we will wait for the interest to be received to realize it as income."

Could anyone assist with their opinion on this matter?