Superannuation funds and pre-1999 unit trusts – it is not all over

05 February 2009 Topics: Superannuation, Trusts

In 1999, the Government amended the Superannuation Industry (Supervision) Act 1993 to limit investments by trustees of self-managed superannuation funds in related unit trusts.

Investments made before 11 August 1999 were grandfathered, and a number of transitional exemptions were introduced to allow further investments up to 30 June 2009.

There are many misconceptions about the rules, and with 30 June 2009 approaching clients should review their related unit trusts to ensure they have taken maximum advantage of the transitional rules, and to ensure the trust can continue after 30 June 2009. There are a number of strategies clients can implement, including:

  • transferring units to related entities – which may not attract stamp duty in some cases;
  • changing debt to interest only, including refinancing with a related entity;
  • issuing units now to use up transitional exemptions; and
  • paying out debt and using the ungeared entity exemption for future investments.

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