Technical experts have recommended SMSF practitioners ensure trustees keep transactions with any payments from a unit trust in which a fund has invested as clean as possible, particularly when death benefits are involved, even if additional steps must be taken in order to achieve a necessary outcome.
Accurium head of tax education Lee-Ann Hayes and her colleague, head of SMSF education Mark Ellem, made the suggestion in response to a question as to how to pay out the proceeds from the sale of a property held in a unit trust in which an SMSF is invested where the member has died.
Specifically, the practitioner asked whether the cash generated from selling the property needed to be paid to the SMSF first and then to the death benefit recipients or could the payment bypass the super fund.
“I would probably not [avoid going through the SMSF]. You want [all transactions] to look neat and you want to be able to explain things to the tax office neatly,” Hayes told delegates at the recent SMSF Professionals Day 2025 co-hosted by selfmanagedsuper and Accurium.
“I think [the ATO] want to see that if I’d sold [the property], we’ve got a flow of funds coming back [to the SMSF that will then] be transferred out to the [deceased member’s] estate.”
Ellem concurred he would want to see the sale proceeds managed in the most straightforward way possible and noted the circumstances where the thought to exclude the SMSF in a unit trust distribution often arises.
“Normally this [type of query] comes up when the person hasn’t died, [but] they just want to get the property out [of the unit trust] and they want to avoid the double stamp duty and we’re just transferring the property in specie from the unit trust to the beneficiary. That can be done with various documents and set of arrangements,” he explained.
“But in this case, as the property has been sold and the unit trust has the cash, then why not just simply transfer the cash to the super fund’s bank account and then transfer it out from the [SMSF’s] bank account to the beneficiary or beneficiaries.”
