SMSF - unlisted securities transfer from old SMSF to new SMSF

[#1]

Hi,

I have a question about in specie transfer of Unlisted securities from old SMSF to new established SMSF.

1. Can SMSF do in specie tranfer of unlisted securities?

2. Which law or SIS Act allow?

3. Is there any issue that trustee should be aware? 

Thanks

[#2 · Accepted solution]

1. Can SMSF do in specie tranfer of unlisted securities?

Yes

2. Which law or SIS Act allow?

It is a rollover, as allowed by SISA.

3. Is there any issue that trustee should be aware? 

The fund's accounts need to treat as a sale, and provision any tax against the member's account balance before the rollover occurs.

All the normal rollover rules apply.

[#3]

Hi @KTran

Welcome to the Community.

If the two self-managed super funds (SMSF) are unrelated to each other then there shouldn't be an issue as long as the new SMSF acquires the asset from the old SMSF at market value.

As @Bruce4Tax has correctly said, there will be potential capital gains tax (CGT) consequences for the old fund as it will need to treat the transfer of ownership as a sale.

If the two SMSFs are related to each other then it may not be possible to conduct the in-specie transfer of unlisted securities. This is because of the investment restrictions around acquiring assets from related parties.

You can check out the related parties and relatives and the acquiring assets from related parties pages on our website for further information.

There is a provision that allows for in-specie transfers between funds in the event of a relationship breakdown. Refer to the superannuation and relationship breakdowns page for more information.

Hope this helps.

Thanks,

ChrisR

[#4]

One other thing to add - there are special rules for relationship breakdowns. 

So as ChrisR says:

• if the new SMSF is completely unrelated to the old one (different members, not related in any way, not "related parties" as ChrisR mentions), then you're fine
• if the new SMSF IS related to the old one (eg the existing members are just splitting up their fund) then often there is a problem.  But not if the reason for the assets moving around is that the two people have divorced and one party is shifting their super into a new SMSF by transferring some assets in specie.  Under those circumstances there's a special exemption to the usual restrictions on acquiring assets from a related party.