The ATO has released a decision impact statement in relation to the Aussiegolfa Full Federal Court decision. The decision, as previously discussed, considered the application of the sole purpose test and the in-house asset rules in relation to an investment by an SMSF in a sub-fund which held a residential property that was leased to the daughter of the SMSF member.

The ATO states that it agrees with the Court’s finding that the interest in the sub fund was an investment in a related trust for the purpose of the in-house asset rules. It also confirmed that it is prepared to use section 71(4) of the Superannuation Industry (Supervision) Act 1993 to deem investments in a trust to be an in-house asset (which wasn’t ultimately required in this case).

Not surprisingly, the ATO reads down the finding that the sole purpose test was not breached. In particular, the ATO notes:

• “we do not consider that the case is authority for the proposition that a superannuation fund trustee can never contravene the sole purpose test when leasing an asset to a related party simply because market-value rent is received”

• “the observations of the court that a collateral purpose, and a contravention of section 62 of the SISA, could well be present if, for example, the circumstances indicated that leasing to a related party had influenced the fund's investment policy … even where the associate pays rent at market value”

To discuss this further or for more information please contact:

Phil Broderick
Principal
Sladen Legal
T +61 3 9611 0163  l M +61 419 512 801   
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pbroderick@sladen.com.au           
 
Ashleigh Eynaud
Associate
Sladen Legal
T +61 3 9611 0129
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia  
E: aeynaud@sladen.com.au