Superannuation Industry (Supervision) Act 1993

PART 8 - IN-HOUSE ASSET RULES APPLYING TO REGULATED SUPERANNUATION FUNDS  

Division 1 - Object and interpretation  

Subdivision D - Transitional arrangements in relation to in-house assets  

SECTION 71E   EXCEPTION - CERTAIN GEARED INVESTMENTS  

71E(1)    
If:

(a)    

at any time (the post-test time ) after the test time, an asset of a superannuation fund that has no more than 6 members consists of an investment (the post-test time investment ) in a unit trust or a company (the first entity ) made during the period:

(i) beginning at the test time; and

(ii) ending at the end of 30 June 2009; and

(b)    immediately before the test time, another asset (other than an in-house asset) of the superannuation fund consisted of an investment (the prior investment ) in the first entity; and

(c)    immediately before the test time, an amount (the principal ) consisting of the principal of a loan was owed by the first entity to any entity other than the superannuation fund; and

(d)    apart from this Subdivision, the post-test time investment would be an in-house asset of the fund at the post-test time; and

(e)    

the trustee, or the trustees, of the fund makes a written election, within:

(i) the period of 12 months beginning on the day on which this section commenced; or

(ii) such later period as is prescribed by the regulations;

that section 71E is to apply to all post-test time investments of the fund in that entity;

Note:

Under subsection 103(2A) , the trustee, or the trustees, of the fund must keep the election, or a copy of it, for 10 years after it is made.

then subsection (2) or (3) , as the case requires, applies, and is taken always to have applied, to the post-test time investment.

71E(2)   Sum of purchase prices of post-test time investments does not exceed the principal - investment not an in-house asset.  

The post-test time investment is not an in-house asset of the fund at the post-test time if the sum of the following amounts does not exceed the amount of the principal:

(a)    the purchase price of the post-test time investment;

(b)    the purchase price of any previous post-test time investment in the first entity by the fund.

71E(3)   Sum of purchase prices of post-test time investments exceeds the principal - formula to be applied.  

If the sum of the following:

(a)    the purchase price of the post-test time investment;

(b)    the purchase price of any previous post-test time investment in the first entity by the fund;

exceeds the amount of the principal, then:

(c)    the post-test time investment is an in-house asset of the fund at the post-test time; and

(d)    if the post-test time investment is the first post-test time investment in respect of which the sum of the amounts referred to in paragraphs (a) and (b) exceeds the amount of the principal - subsection (4) applies to the investment.

71E(4)   Reduced value for the purposes of working out value of in-house assets.  

For the purposes of working out the formula component Number of whole dollars in value of in-house assets of the fund under section 75 at the post-test time, the value of the post-test time investment at the post-test time is taken to be the number of whole dollars in the amount worked out as follows:

Market value of post-test time investment

×

Excess amount                 Purchase price of post-test time investment

where:

excess amount
means the amount of the excess under subsection (3) .

market value of post-test time investment
means the market value of the post-test time investment as at the post-test time.

purchase price of post-test time investment
means the purchase price of the post-test time investment.

71E(5)   Effect of election.  

If the trustee, or the trustees, of a fund make an election under paragraph (1)(e) in respect of the post-test time investments of the fund in an entity, then:

(a)    sections 71A and 71D do not apply, and are taken never to have applied, to any post-test time investment by the fund in that entity; and

(b)    this section applies, and is taken always to have applied, to any post-test time investment of the fund in that entity.

Note:

This means that if a fund makes an election, this section would apply to all investments in the entity after the test time and before 1 July 2009, and sections 71A and 71D would not apply to such investments.

71E(6)   Application of section to loans.  

A reference in this section to an investment in a trust or company is taken to include a reference to a loan to a trust or company. For this purpose, the purchase price of the loan is taken to be the principal of the loan at the time at which the loan was made.