Test a fund's in-house assets against the 5 per cent limit
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- From the asset list and the values the fund has adopted, list each loan to a related party, each investment in a related party, and each asset leased to a related party, and the total as a percentage of the market value of all assets. Do not decide that an asset is excluded, and do not write the plan to reduce the holding.
- What the lawyer must review
- The lawyer decides which assets are in-house assets and writes any plan. The Tax Office states that a self-managed fund must not have in-house assets of more than 5 per cent of the market value of its total assets. An in-house asset is a loan to a related party, an investment in a related party, or an asset leased to a related party. A lease must be on arm's length terms and reflect market value. If the limit is exceeded at the end of the financial year, a written plan to reduce the holding to 5 per cent or below is prepared before the end of the next financial year, and is carried out. Business real property leased to a related party is one exception the page names. A fund must not acquire an asset from a related party unless the price is market value and the asset is a listed security, or an in-house asset whose acquisition does not take the holding over 5 per cent, or an asset specifically excluded from being an in-house asset. Crypto-assets and private-company shares are not listed securities and cannot be acquired from a related party. Assets acquired before 11 August 1999 are under transitional rules on a page that was not opened. The ruling on the meaning of asset, loan, investment and lease was not opened. The lawyer reads both before treating an asset as outside the limit. The percentage is not a substitute for the related-party transaction list kept for another purpose.
- Written for / version
- US
Open a jurisdiction version of this task to see which instruments apply: US
Who does what
| Role | What they do |
|---|---|
| Assistance | From the asset list and the values the fund has adopted, list each loan to a related party, each investment in a related party, and each asset leased to a related party, and the total as a percentage of the market value of all assets. Do not decide that an asset is excluded, and do not write the plan to reduce the holding. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Use the market values the fund has adopted. Do not insert a value.
- If the total is over 5 per cent at 30 June, diarise the written plan before the end of the next financial year.
- Confirm the plan is written by the lawyer, and that a crypto-asset or a private-company share is not treated as a listed security.
Sources
These are suggested working checks. Confirm the required checking with the responsible lawyer before work starts; the checking approach does not establish permission to use AI.