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Date of article: 30 December 2011
Last updated: 31 August 2012

In-specie shares contribution to be banned

As part of the release of the Stronger Super Reform information package on 21 September 2011, the Government will ban in-specie contributions of listed securities to a self-managed superannuation fund from 1 July 2012.

This measure has been deferred by the Government and legislation will be introduced in time to take effect from 1 July 2013.

The Government will legislate to require related party transactions to be conducted through the market where one exists. If no market exists, the transaction must be supported by a valuation from a suitably qualified independent valuer.

Concerns were raised in consultation that requiring related party transactions to be conducted through a market could involve transaction risk and result in increased costs. However, non-market transactions are not transparent and are open to abuse. Abuse can occur through transaction date and asset value manipulation to achieve more favourable outcomes in terms of contributions caps and capital gains tax.

The banning of the in-specie shares contribution will mean that to achieve the same result, a member will need to:

1. dispose of the shares on market and wait for settlement of the disposal proceeds,

2. transfer the disposal proceeds to the superannuation fund as a contribution,

3. after the superannuation fund receives the money, acquire the shares on market.

The time factor in transacting the above will mean that the member and/or superannuation fund bears the market risk. The shares may or may not be acquired for the same price on market.


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