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SUPERANNUATION INDUSTRY (SUPERVISION) ACT 1993 - SECT 71E

Exception--certain geared investments

             (1)  If:

                     (a)  at any time (the post-test time ) after the test time, an asset of a superannuation fund that has fewer than 5 members consists of an investment (the post-test time investment ) in a unit trust or a company (the first entity ) made during the period:

                              (i)  beginning at the test time; and

                             (ii)  ending at the end of 30 June 2009; and

                     (b)  immediately before the test time, another asset (other than an in-house asset) of the superannuation fund consisted of an investment (the prior investment ) in the first entity; and

                     (c)  immediately before the test time, an amount (the principal ) consisting of the principal of a loan was owed by the first entity to any entity other than the superannuation fund; and

                     (d)  apart from this Subdivision, the post-test time investment would be an in-house asset of the fund at the post-test time; and

                     (e)  the trustee, or the trustees, of the fund makes a written election, within:

                              (i)  the period of 12 months beginning on the day on which this section commenced; or

                             (ii)  such later period as is prescribed by the regulations;

                            that section 71E is to apply to all post-test time investments of the fund in that entity;

Note:       Under subsection 103(2A), the trustee, or the trustees, of the fund must keep the election, or a copy of it, for 10 years after it is made.

then subsection (2) or (3), as the case requires, applies, and is taken always to have applied, to the post-test time investment.

Sum of purchase prices of post-test time investments does not exceed the principal--investment not an in-house asset

             (2)  The post-test time investment is not an in-house asset of the fund at the post-test time if the sum of the following amounts does not exceed the amount of the principal:

                     (a)  the purchase price of the post-test time investment;

                     (b)  the purchase price of any previous post-test time investment in the first entity by the fund.

Sum of purchase prices of post-test time investments exceeds the principal--formula to be applied

             (3)  If the sum of the following:

                     (a)  the purchase price of the post-test time investment;

                     (b)  the purchase price of any previous post-test time investment in the first entity by the fund;

exceeds the amount of the principal, then:

                     (c)  the post-test time investment is an in-house asset of the fund at the post-test time; and

                     (d)  if the post-test time investment is the first post-test time investment in respect of which the sum of the amounts referred to in paragraphs (a) and (b) exceeds the amount of the principal--subsection (4) applies to the investment.

Reduced value for the purposes of working out value of in-house assets

             (4)  For the purposes of working out the formula component Number of whole dollars in value of in-house assets of the fund under section 75 at the post-test time, the value of the post-test time investment at the post-test time is taken to be the number of whole dollars in the amount worked out as follows:

where:

"excess amount " means the amount of the excess under subsection (3).

"market value of post-test time investment " means the market value of the post-test time investment as at the post-test time.

"purchase price of post-test time investment " means the purchase price of the post-test time investment.

Effect of election

             (5)  If the trustee, or the trustees, of a fund make an election under paragraph (1)(e) in respect of the post-test time investments of the fund in an entity, then:

                     (a)  sections 71A and 71D do not apply, and are taken never to have applied, to any post-test time investment by the fund in that entity; and

                     (b)  this section applies, and is taken always to have applied, to any post-test time investment of the fund in that entity.

Note:          This means that if a fund makes an election, this section would apply to all investments in the entity after the test time and before 1 July 2009, and sections 71A and 71D would not apply to such investments.

Application of section to loans

             (6)  A reference in this section to an investment in a trust or company is taken to include a reference to a loan to a trust or company. For this purpose, the purchase price of the loan is taken to be the principal of the loan at the time at which the loan was made.



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