A 13.22C Unit Trust is a unique trust structure that allows SMSFs to invest alongside other investors, including related parties.
For example, if you want to buy a property but don’t have enough cash, you and your SMSF can co-invest by purchasing the property through a 13.22C Unit Trust. This allows multiple parties, including individuals and SMSFs, to pool their funds while ensuring compliance with superannuation laws.
However, this structure comes with strict rules. If any of these rules are broken, the SMSF could face serious consequences, including tax penalties and compliance breaches, which may put the fund’s tax concessions at risk.
This structure is not meant for:
❌ Borrowing money (it must remain a non-geared unit trust)
❌ Holding a mortgage or any asset with a charge over it
❌ Investing in other companies or trusts (for example, it cannot buy shares in BHP)
❌ Leasing property to a related party, unless it’s a business real property (i.e., commercial property used in a business)
❌ Lending money (except for deposits in an Australian bank account)
❌ Buying assets from a related party (unless it’s a commercial property purchased at market value)
Additionally, the unit trust cannot own any asset that was previously owned by a related party since:
- August 11, 1999, or
- Three years before the SMSF first invested in the unit trust—whichever is later.
Reference:
