From www.dbalawyers.com.au: The Full Court of the Federal Court of Australia determined that the dominant purpose of the Merchant group’s transaction involving the Gordon Merchant Superannuation Fund was to obtain a tax benefit by crystallizing a capital loss.

Although the AAT initially set aside Mr. Merchant’s disqualification as trustee due to mitigating factors, the Full Court’s ruling indicates that SMSFs engaging in related party transactions at market value could still attract scrutiny from the ATO.

Advisers are advised to thoroughly evaluate the context of such transactions to avoid unforeseen compliance issues.