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19 May 09 Non-commercial use of negotiable instruments involving self-managed superannuation funds - TA 2009/10

This Taxpayer Alert was issued on 18 May 2009. It describes arrangements involving non-commercial use of negotiable instruments to pay a benefit from or make a contribution to a self-managed superannuation fund (SMSF). The ATO is concerned that some SMSF trustees and members are attempting to use negotiable instruments in a non-commercial and contrived manner to artificially avoid liquidity problems, change the timing of transactions or to obtain taxation advantages. The arrangements involve a trustee or member issuing a promissory note, cheque or other negotiable instrument which is passed between trustees and members with no exchange of money or assets ever taking place, or the exchange may be delayed intentionally.

This Taxpayer Alert does not apply to the use of negotiable instruments involving real movements of funds or assets through genuine withdrawal and re-contribution strategies. However, it does cover artificial and contrived arrangements including "round robin" transactions.

For a copy of TA 2009/10 go here.

For a copy of the ATO's statement accompanying TA 2009/10 go here.

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