Trustees of an SMSF need to factor in the different tax lodgement dates for investments in unlisted shares or units in a private unit trust as these dates could change and lock in the reporting date for a fund.
SMSF Alliance principal David Busoli said these types of investments were allowable within an SMSF where the deed and investment strategy permitted them, but their tax return lodgement dates were typically later than the SMSF itself.
“This is particularly problematic when the SMSF is an October lodger as the accountants responsible for producing the investment entity’s accounts may not feel inclined to bring forward their completion to assist the SMSF to satisfy this,” Busoli said.
He noted that where an SMSF missed the October lodgement, it would then be required to lodge in October of the next year, which could become permanent and result in penalties from the ATO.
“A solution is to lodge the SMSF return then redo the fund accounts when the accounts for the investment entity have been completed. This will reinstate the standard SMSF lodgement date for next year which, hopefully, will avoid the problem going forward,” he said.
He warned that while this may be the only compliant alternative to correct the timing issue, it does require agreement from the fund’s auditor, who may also require justification for the value placed on shares or units held within an SMSF at the same level required for direct fund investments.
“They will generally also require some acknowledgement in the investment strategy of the extra issues surrounding the interposed entity,” he said.
“This type of investment can have many benefits, but may require a little more ongoing effort.”