Bartering does not circumvent SIS Act, says ATO

Self-managed superannuation fund (SMSF) trustees have been warned against entering into arrangements such as bartering which may be deemed to breach the legislative provisions around superannuation .

The warning has come from Cavendish Superannuation head of education, David Busoli, who pointed to a recent interpretive decision handed down by the Australian Taxation Office.

Busoli said the interpretive decision made it clear that arrangements needed to be looked at as a whole, because while their component parts might not give rise to a breach, the total product might well lead to penalties.

The ATO interpretive decision 2011/84 looked at a trade exchange or bartering arrangement and held that it did contravene the anti-avoidance provision in subsection 66(3) of the Superannuation Industry (Supervision) Act 1993 (SISA).

It said this arrangement, taken as a whole, was "structured with the intention that the acquisition by the SMSF of units in a unit trust from a party that was not a related party to the SMSF, avoided the prohibition (in subsection 66(1) of the SISA) of the SMSF acquiring assets from a related party. The parties to the arrangement are therefore guilty of an offence under subsection 66(4) of the SISA". 

The interpretive decision found that while the trustee of the unit trust was not a related party of the SMSF, nor was the unit trust a related trust of the SMSF. The company itself was a related party of the SMSF because a member of the SMSF, together with her relatives, has a majority voting interest in the company in accordance with the definition of 'related party'.