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An organiser ('the organiser') has in possession one or more inactive SMSFs registered before 11 August 1999 ('pre 1999 SMSF') that hold an interest in a related unit trust which was acquired before 11 August 1999 ('the interest' in 'the unit trust'). The pre 1999 SMSFs may be inactive because, while registered with a nominal contribution, they may not have: • had any active members; • received any subsequent contributions; • made any investments; or • been continuously maintained for providing superannuation benefits to members on retirement e.g. where the fund was established, or subsequently sold, for the purpose of making a profit. 2. The organiser advertises the sale of a pre 1999 SMSF and the unit trust. Typically, the advertising material states that the arrangement qualifies under the transitional provisions and therefore provides taxation and superannuation regulatory benefits, including: a. Allowing ownership of a residential property through the pre 1999 SMSF and gearing through a related unit trust, then leasing the property to a related party (e.g. a member of the SMSF), which would not otherwise be permitted for post 1999 SMSFs; b. Deducting interest expense which may not be deductible to other parties (i.e. private or domestic expenses of a member of the SMSF, or expenses incurred in producing exempt income of the SMSF); c. Reducing/avoiding potential capital gains tax through the lower taxes paid by the SMSF (i.e. on the property held through the unit trust), and; d. Circumventing the superannuation regulatory restrictions (especially the in-house asset rules) that would result in the SMSF's income or capital gains being subject to higher rates of tax. 3. The organiser may also allege that the arrangement is supported by a Tax Office view (such as ATOID 2002/388) without any qualification regarding materially different facts. This may mean that the arrangement does not qualify under the transitional provisions and that the advertised superannuation regulatory or taxation benefits would not be available. 4. A taxpayer pays a fee to the organiser to effectively gain control of, or membership in, an inactive pre 1999 SMSF which holds the interest in the unit trust. 5. The organiser then changes the control of the pre 1999 SMSF to the taxpayer by arranging for a change in the member(s) and trustee(s), or director(s) in the case of a corporate trustee, and moves previous member(s) account balance(s) out of the SMSF. 6. The fund investment strategy of the pre 1999 SMSF may be updated to cover the fund's new investments (to meet other superannuation regulatory requirements). 7. To attempt to exploit the transitional provisions (and gain the advertised superannuation regulatory or taxation benefits), the new member(s) make contributions and/or rollover existing benefits held in complying superannuation fund(s) to the pre 1999 SMSF, which are then invested in the related unit trust. This investment may include paying up partly paid up units or applying the funds to existing units to facilitate the purchase of a property or land. 8. The organiser charges a substantial fee for establishing this arrangement, based upon the perceived commercial advantages of the advertised superannuation regulatory or taxation benefits.