Related party rules could see unintended breaches: SPAA
Changes to the legislation around related party transactions for self-managed superannuation funds (SMSF) could see trustees punished for unintentional breaches, according to SMSF Professionals' Association (SPAA) technical director Peter Burgess.
Burgess expressed concerns about the changes to the language in the draft legislation aimed at tightening the rules relating to the acquisition and disposal of listed and unlisted securities by SMSFs and related parties.
Particularly, he pointed to the decision to change the legislative requirement from ‘must not intentionally acquire an asset from a related party of the fund' to ‘must not acquire an asset from a related party' as having "serious consequences for SMSF trustees".
"Removing the word ‘intentionally' may have important implications for SMSF trustees who may be considered to have breached the related party asset rules even though it was unintentional, especially as new administrative and civil penalties will apply under this legislation," said Burgess.
The definition of ‘related party' could give rise to situations where the entity concerned is a subsidiary company "further down the chain of ownership", said Burgess.
The requirement that trustees ‘must not intentionally acquire' must be retained in the new SMSF related party acquisition rules, he said.
"It would mean inadvertent purchases of assets from related parties would not be penalised, as well as maintain an equitable position with APRA-regulated funds," said Burgess.
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