SPAA seeks better controls on off-market transfers
The Self-Managed Super Fund Professionals' Association (SPAA) is continuing to advocate tighter legislative controls around off-market transfers, despite the Government's decision to defer a proposed ban on the arrangements.
The Government's proposed ban would result in an end to off-market transfers between self-managed super funds (SMSFs) and related parties where a market exists from 1 July 2013.
SPAA said the deferral would give the Government more time to work out a "number of serious practical issues that threaten to derail the measure".
SPAA technical director Peter Burgesssaid the problem with this approach is that the Corporations Act prohibits investors from selling securities on-market with the intention of buying back that security on-market - sometimes referred to as a 'wash trade'.
"This is why the transaction is done off-market; if it is done on-market, SMSF investors and market participants may face serious penalties for breaching the market integrity rules under the Corporations Act," Burgess said.
He added that these rules were there to prevent market rigging and the false or misleading appearance of active trading of a security, which "clearly is not the intention or motive of an SMSF investor".
Unless this issue is resolved, SMSF investors would be banned from transferring any listed securities they own to their fund, which goes well beyond what was proposed and intended by the Cooper Review, Burgess added.
SPAA continues to advocate tighter legislative controls as an alternative to the ban.
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