There is a common misconception that where acquiring units in a related, “pre 1999 trust”, the rules contained in SIS Regulation 13.22C are applied to the new units at the time of acquisition.
SIS Regulation 13.22C sets out strict criteria to be met in order for a related party investment to be excluded from the In House Asset rules. However, if any of the events contained in SIS Regulation 13.22D occur in respect to the related trust, then Regulation 13.22C ceases to apply to all current & future investments in that company or unit trust. For example, if a related pre-1999 trust made a new borrowing of money in 2004, and subsequently repaid this debt in 2006, any units purchased on or after 1/7/2009 are therefore not excluded as an In House Asset under the provisions of Regulation 13.22C. In other words, the trust is required to continuously meet the criteria contained in Regulation 13.22C from its commencement on 28/6/2000.
It is noted that Section 71A. of the SIS Act still operates to exclude units purchased prior to 11/8/1999, and further investments up to 30/6/2009. The above information can also be referred to in ATO ID 2012/53.
