Issue
Whether the Superannuation Industry (Supervision) Act 1993 (SIS) prohibits a Self Managed Superannuation Fund (SMSF) from acquiring a licence to harvest seafood from a related party of the SMSF.
Decision
Yes, the SIS does prohibit a SMSF from acquiring a licence to harvest seafood from a related party of the SMSF.
Facts
The employer-sponsor of the SMSF currently owns a licence to harvest seafood.
The SMSF had previously purchased a similar licence to harvest seafood.
The trustees of the SMSF wish to acquire a licence to harvest seafood from a related party, the employer-sponsor.
The relevant State Government has issued a limited number of these particular licences. These licences are purchased on the open market.
Reasons for Decision
Section 66(1) of the SIS prohibits the trustee or investment manager of a regulated superannuation fund from intentionally acquiring an asset from a related party of the fund. This general prohibition is subject to certain exceptions set out in subsection 66(2) of the SIS. The exceptions are assets which are: • listed securities acquired at market value; or • the asset is Business Real Property acquired at market value; or • assets under a merger between regulated superannuation funds; or • assets of a kind which the regulator has stated, by written determination, may be acquired. Listed securities are defined in subsection 66(5) of the SIS to be a share, a unit, a bond or debenture, a right or option or any other security listed on an official stock exchange of Australia or an approved within the meaning of section 470 of the Income Tax Assessment Act 1936 or an exempt stock market within the meaning of section 771 of the Corporations Law.
Business real property is defined in subsection 66(5) of the SIS. Essentially it is any real property, acquired at market value, used wholly and exclusively in one or more businesses, but does not include any interest held in the capacity of beneficiary of a trust estate.
The licence is not currently an asset of another regulated superannuation fund with which the SMSF is merging.
The Regulator has not issued a written determination in respect of this asset.
As the licence does not come within any of the exceptions provided by subsection 66(2) of the SIS, the SMSF is prohibited from acquiring that asset from the related party.