The Government has dropped its proposed new rules for acquisitions and disposals of certain assets between self-managed superannuation funds (SMSFs) and related parties from 1 July 2013. The Tax and Superannuation Laws Amendment (2013 Measures No 1) Bill 2013 passed the House of Reps on 29 May 2013 with Government amendments that deleted the SMSF related party acquisition measures. The Bill (which still contains the tax loss carry-back measures, as amended) now moves to the Senate.
No indication was given by the Government as to why the SMSF amendments were deleted, although the Coalition had indicated it would oppose the amendments and suggested there were concerns from stakeholders about practical difficulties with the proposed valuation requirements. Concerns had also been raised about extra costs that would be imposed on SMSFs because of the amendments, eg in having to go on-market to acquire publicly available investments and costs with the need to obtain valuations.
The Bill as originally introduced had proposed to amend the SIS Act to prohibit a trustee of an SMSF from acquiring a “listed security” from a related party (except in a way to be prescribed by the regulations): proposed s 66A. Similar to the existing exceptions in s 66 of the SIS Act, the Bill provided that it would still be possible to acquire (or dispose of) business real property and certain in-house assets (not exceeding 5%) from a related party, provided the asset was acquired at market value as determined by a qualified independent valuer. Note that the Bill did not propose to include in s 66A the “intentional” requirement from “must not intentionally acquire an asset from a related party of the fund” in existing s 66. As such, the Bill could have resulted in a trustee of an SMSF being liable for unintended breaches where the acquisition (or disposal) is from a subsidiary company or trust in a diverse group of companies.