An SMSF holds units in a unit trust that owns a property (not a related unit trust, not an in-house asset, three unrelated unit holders).
The unit trust requires an injection of cash to cover expenses.
If the unit trust were to issue new units, are there any requirements regarding the price per unit? For example, should it be relative to the market value of the trust's net assets?
Any other compliance issues to consider?
Thank you.
Hi Jason
Yes if a Unit Trust issues new units they should be based on the market value of the trust's net assets.
The trust deed of the Unit Trust should be reviewed in relation to the rules re the issue of new units.
The other compliance issues to consider is making sure the unit trust is not a related party (or become one after the issue of new units) to the Fund as that could lead to a breach of the in-house asset rules.
Thanks
The Auditors Institute