Aussiegolfa Pty Ltd (Trustee) v Commissioner of Taxation

1. The application be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PAGONE J: 1 The applicant ("Aussiegolfa") seeks declarations in respect of its investment in units in a fund which the Commissioner contends is in breach of the sole purpose test and the in-house asset rules in ss 62 and 71 of the Superannuation Industry (Supervision) Act 1993 (Cth) ("the SIS Act"). Aussiegolfa has also sought review in the Administrative Appeals Tribunal of a determination made by the Commissioner, as the regulator, under s 71(4)(b) of the SIS Act. This proceeding was heard immediately before that of the Tribunal and the evidence given in this proceeding was received as evidence in the Tribunal. 2 Aussiegolfa is the trustee of the Benson Family Superannuation Fund ("the Benson Fund") which was established on 20 November 2011 as a self-managed fund within the meaning of s 17A(2) of the SIS Act. Mr Christopher Benson is the sole member of the Benson Fund and since January 2015 has been employed as the Victorian State Manager of DomaCom Australia Ltd ("DomaCom"). DomaCom holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission ("ASIC") and manages a fund ("the DomaCom Fund") being a managed investment scheme established to provide investors with the opportunity to invest in fractional interests in property. The DomaCom Fund is a trust declared by the responsible entity and is governed by a Constitution dated 12 December 2013 as amended from time to time. Perpetual Trustee Services Ltd is the responsible entity of the DomaCom Fund, Perpetual Corporate Trust Ltd is the custodian of the DomaCom Fund, and DomaCom is its investment manager. 3 Mr Benson resolved with his mother, brother and sister at a family meeting in February 2015 to invest in residential property in Melbourne in student accommodation and other relatively low cost, relatively high return opportunities. His mother is a self-funded retiree living in Melbourne, and his brother and sister set up their own self-managed superannuation funds shortly after the February meeting. In March 2015 Mr Benson, with members of his family, inspected a prospective studio apartment in a student accommodation complex located at Unit 1, 390 Burwood Highway, Burwood, Victoria ("the Burwood property") and decided to invest in the Burwood property through DomaCom by Mr Benson's mother acquiring 50% of the units in a sub-fund of the DomaCom Fund and Mr Benson and his sister each agreeing to purchase 25% of the units in the sub-fund. Mr Benson's brother decided not to participate in the acquisition of any units because his wife became unwell at about the time of the decision to make the investment. 4 On 31 March 2015 Aussiegolfa completed and forwarded an application to invest in DomaCom through which DomaCom would acquire the Burwood property. The application was for a minimum investment of $20,000 to establish an account in the DomaCom Fund and acknowledged that Mr Benson had received a product disclosure statement and that the application for Aussiegolfa to become an investor, if accepted, would "be subject to the terms and conditions of the Constitution and [the] Product Disclosure Statement". $28,080 was paid by Aussiegolfa from the Benson Fund for investment in DomaCom by acquisition of 28,080 $1 units in a sub-fund by an initial investment of $20,000 around 2 April 2015 and a further $8,080 soon after. The $28,080 paid by Aussiegolfa at that time was held by the responsible entity in a Cash Pool ("the Cash Pool") pending acquisition by the responsible authority of the Burwood property. 5 In July 2015 DomaCom completed due diligence, contract review and valuation procedures in respect of the Burwood property. On 17 July 2015 the responsible entity issued a supplementary product disclosure statement ("the supplementary product disclosure statement") supplementing the product disclosure statement which the responsible entity had issued on 24 June 2015. There had been earlier product disclosure statements, including one dated 1 February 2015, but nothing appears to turn upon the differences between any of the product disclosure statements, including those dated 1 February 2015 and 24 June 2015. 6 The supplementary product disclosure statement of 17 July 2015 set out the information regarding the acquisition of the Burwood property and the establishment of a proposed sub-fund of the DomaCom fund through which DomaCom would hold the Burwood property. On 21 July 2015 the responsible entity purchased the Burwood property for $104,000 on a contract of sale settled on 18 August 2015. A Sub-Fund numbered DMC0114AU ("the Burwood Sub-Fund") was established within the DomaCom Fund upon acquisition of the Burwood property, and a class of units unique to the Burwood Sub-Fund was created. The supplementary product disclosure statement was an invitation to invest in the sub-fund by application which was required to be made by 23 July 2015, but the application which had been made on 31 March 2015 appears to have been taken as sufficient for the subsequent creation of the Burwood Sub-Fund and for the allocation of units to Aussiegolfa pursuant to the DomaCom Constitution. Ross Laidlaw, the director and Chief Operating Officer of DomaCom, explained that a new sub fund was created with the issue of a new and unique class of units as soon as a binding contract to purchase the property was entered into and the initial deposit had been paid. The responsible entity did not pass a resolution to amend the Constitution to create the new units but a new class of units was created by the creation of an Asia-Pacific Investment Register code which identified products for the financial services industry being allocated to units. On 23 July 2015 and 17 August 2015, funds held for Aussiegolfa in the Cash Pool were applied towards the acquisition of units in the Burwood Sub-Fund. 7 On 17 August 2015 the custodian entered into an exclusive leasing and managing authority with Student Housing Australia Pty Ltd ("Student Housing Australia") for the leasing of the Burwood property. The first two student tenants for the Burwood property found by Student Housing Australia as agent for DomaCom were persons unknown, and unrelated, to Mr Benson, or to the Benson Fund. The first tenant agreed to pay a monthly rental of $869 for the premises from 8 January 2016 to 23 January 2017. The second tenant also agreed to pay a monthly rent of $869 for the premises for the period from 20 February 2017 until 15 February 2018. The third tenant for the Burwood property secured by Student Housing Australia on behalf of DomaCom was Mr Benson's daughter, Emma Benson, who is a full-time student aged 20 years studying primary teaching at Swinburne University's Hawthorn, Victoria campus. 8 The selection of Emma Benson as the tenant of the Burwood property is explained, in part, by the desire of Mr Benson, and of DomaCom, to test the ability for residential properties held by self-managed superannuation funds to be used by related parties. On 3 April 2017 Mr Benson (as DomaCom's Victorian State manager) informed DomaCom's client services manager in an email that Mr Benson and some family members were using the Burwood property to test "the related party use of residential property within" self-managed superannuation funds. On 11 April 2017 Mr Benson submitted a completed application form to Student Housing Australia on behalf of his daughter to lease the Burwood property from 20 February 2018 at a monthly rent of $869. Mr Benson was identified in the application as the parental guarantor guaranteeing his daughter's obligations under the proposed lease. On the same day Student Housing Australia wrote to Ms Benson congratulating her on securing the tenancy of the Burwood property at the rent which had been proposed in the application. At about the same time Ms Benson signed a standard form Residential Tenancy Agreement for the property providing for rental from the period 20 February 2018 until 19 February 2019 at the monthly rent of $869. 9 It is the Commissioner's view that the leasing arrangement with Ms Benson causes the Benson Fund to breach the sole purpose test and the in-house asset rules in the SIS Act. Aussiegolfa commenced these proceedings in the Federal Court in May 2017 to challenge that view. On 3 July 2017, however, the Commissioner made a determination under s 71(4) of the SIS Act that the units held by Aussiegolfa as trustee for the Benson Fund in DomaCom Sub-Fund DMC0114AU are to be treated as an investment in a related trust of the Benson Fund. Aussiegolfa has sought review by the Tribunal of that determination in proceedings which were heard immediately following the hearing by the Court of this proceeding. The effect of the determination, unless set aside in the exercise of the Tribunal's discretion, or unless the determination is held to be invalid by this Court, is that the units held by Aussiegolfa in its capacity as trustee of the Benson Fund will be taken to be an investment in a related trust for the purposes of Part 8 of the SIS Act. 10 The Benson Fund is eligible for concessional tax treatment under Division 295 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") provided that it is a complying superannuation fund. Section 45 of the SIS Act provides that a superannuation fund is a "complying superannuation fund" for the purposes of the 1997 Act, amongst others, if it has received a notice to that effect under s 40 from the regulator and has not received a notice subsequently stating that it is not a complying superannuation fund. Section 45 provides: Complying superannuation fund (1) A fund is a complying superannuation fund for the purposes of the Income Tax Assessment Act in relation to a year of income (the current year of income) if, and only if: (a) the Regulator has given a notice to a trustee of the fund under section 40 stating that the fund is a complying superannuation fund in relation to the current year of income; or (b) the Regulator has given a notice to a trustee of the fund under section 40 stating that the fund is a complying superannuation fund in relation to a previous year of income and has not given a notice to a trustee of the fund under that section stating that the fund was not a complying superannuation fund in relation to: (i) the current year of income; or (ii) a year of income that is: (A) later than that previous year of income; and (B) earlier than the current year of income. (2) Despite section 2, the previous year mentioned in paragraph (1)(b) may be a year of income earlier than the 1994-95 year of income (see section 49). However, despite section 49, if the fund was not a regulated superannuation fund at all times during the current year of income when the fund was in existence, paragraph (1)(b) does not apply unless the previous year of income is the 1994-95 year of income or a later year of income. (3) For the purposes of this section, if a notice under section 40 is revoked, or the decision to give the notice is set aside, the notice is taken never to have been given. (4) Section 170 of the Income Tax Assessment Act does not prevent the amendment of an assessment at any time for the purposes of giving effect to subsection (3). (5) For the purposes of this section, if a notice under section 40 is given in relation to a fund in relation to a year of income, the notice is taken to have been given at the beginning of the year of income. (6) Despite subsection (1), if, at all times during a year of income when a fund was in existence, the fund was, or was part of, an exempt public sector superannuation scheme, the fund is a complying superannuation fund in relation to the year of income for the purposes of the Income Tax Assessment Act. On 15 February 2013 the Commissioner issued a notice under s 40 to the Benson Fund, and there is no dispute that it was a complying superannuation fund except for the dispute between the parties about the effect upon the Benson Fund of a lease to Ms Benson. 11 Aussiegolfa has continuing obligations for the Benson Fund to continue to be a complying fund: see SIS Act, s 42A. Amongst those obligations are that the Benson Fund complies with the in-house asset rules in s 84(1). Those rules limit the proportion of "in-house assets" that a regulated superannuation fund may acquire to no more than 5%, and the trustee must make and implement a plan to reduce the level of the fund's in-house assets to 5% or below before the end of the following year if that percentage is exceeded: see SIS Act, s 82. Aussiegolfa's investment in the DomaCom Fund as at 21 April 2017 represented 7.83% of its assets. The Commissioner contended that Aussiegolfa's investment in those assets cause it not to comply with the in-house rules. Aussiegolfa disputes that and contended that the relevant asset in which it has invested was the DomaCom Fund rather than in the Burwood Sub-Fund and that the combined investment of Aussiegolfa together with that of Mr Benson's mother and sister is less than 1% of the units in the DomaCom Fund. Aussiegolfa also contended that the DomaCom Fund is a "widely held unit trust" and therefore that the investment in DomaCom was within the exemption in paragraph (h) of the definition of "in-house asset" in s 71(1) of the SIS Act. 12 The formal entitlements of Aussiegolfa in DomaCom were governed by the Constitution, a product disclosure statement and a supplementary product disclosure statement, although there was some uncertainty about which versions of the Constitution and of the product disclosure statement governed the rights in question. The DomaCom Constitution as at 31 March 2015 (when Aussiegolfa completed and forwarded the application for units in a sub-fund) had altered by the time that DomaCom acquired the Burwood property. Different versions of the product disclosure statement were tendered in evidence including a product disclosure statement dated 1 February 2015, a product disclosure statement dated 4 March 2015 and one dated 24 June 2015. The process by which sub-funds were created in the DomaCom Fund was explained by Mr Ross Laidlaw as recited above. His description is not to be taken in substitution for the effect of the documents and operative transactions, but reflected what was intended by them. Mr Laidlaw explained that a new class of units was created, as mentioned above, when the property was acquired, by a unique Asia Pacific Investment Register code being allocated by DomaCom to units. Mr Laidlaw's evidence was, therefore, that the units representing the Burwood Sub-Fund did not exist until after acquisition of the Burwood property which occurred between July and August 2015. On that view the relevant terms of the Constitution were those which were operative as at July 2015 and the relevant product disclosure statement was that dated 24 June 2015. In each case the relevant supplementary product disclosure statement, however, was that dated 17 July 2015. 13 The application by Aussiegolfa on 31 March 2015 had acknowledged having received a product disclosure statement and that the investment would be subject to the terms and conditions of the Constitution (as amended from time to time) and to the terms and conditions of a product disclosure statement. Mr Benson, on behalf of Aussiegolfa, acknowledged also that those documents may be amended from time to time and that the applicant would be bound by those changes, including any changes in the product disclosure statement between signing the application and the date of first becoming an investor in the DomaCom Fund. Clause 2.2 of the Constitution at the time of Aussiegolfa's application contemplated that the responsible entity would hold the assets of the DomaCom Fund upon different trusts depending upon whether the assets (as defined) were money held in the Wholesale Cash Pool, money held in the Retail Cash Pool, assets acquired on behalf of a class of unit holders, or any other assets which were not held on behalf of a class of unit holders. The Commissioner's submissions placed emphasis upon this version of the Constitution because its terms expressly referred to the holding of assets acquired by the responsible entity on behalf of the holders of a class of units as being held on trust for the unit holders of that class. However, the Commissioner's reliance upon that clause was misplaced because the Burwood property had not been acquired at the time when the terms of a declaration of trust was in that version of clause 2.2. Furthermore, the version of the Constitution when Aussiegolfa applied to invest in DomaCom permitted amendments to be made, and amendments were also expressly contemplated by the terms of the acknowledgement in the application which had been made on 31 March 2015. Amendments were made to the Constitution after the application which was made on 31 March 2015 and it is the terms of the Constitution as at the date of acquisition of the Burwood property and the consequent creation of the units constituting the Burwood Sub-Fund which govern the issues in dispute in this proceeding. The responsible entity had, by the time when the Burwood property was acquired, also given to Aussiegolfa the product disclosure statement dated 24 June 2015 and the supplementary product disclosure statement dated 17 July 2015. 14 The product disclosure statement dated 24 June 2015 explained the general operation of the DomaCom Fund and of the sub-funds, although care must be taken not to construe those documents as independent sources of contractual obligations: see Gunns Finance Pty Ltd (Recrs & Mgrs Apptd) (in Liq) v Sithiravel [2016] NSWSC 1543, [172]-[179]. The product disclosure statement explained that the DomaCom Fund was comprised of a Cash Pool and of sub-funds. An investor was first required to have deposited money into the Cash Pool for a period of at least 14 days before the investor could use any part of that deposit to invest in a sub-fund. Each sub-fund would relate to a single underlying property chosen for investment by the investors, but the underlying property would be acquired by the custodian on behalf of the responsible entity for the sub-fund pursuant to a contract of sale. Clause 6.2 of the product disclosure statement explained that an investor in a sub-fund would not be investing directly in the underlying property, although the investors would be entitled to 100% of the net income received in respect of the underlying property and would be entitled to the net proceeds of the sale of the underlying property. No one investor could unilaterally determine when the underlying property was sold but investors in a sub-fund could pass a resolution approved by unit holders in a sub-fund holding at least 75% of the units on issue in that sub-fund requiring the responsible entity to terminate the sub-fund and to sell the underlying property. 15 The terms of the Constitution when the Burwood property was acquired gave effect to these arrangements. Clause 2.2 of the Constitution at the time when the Burwood Sub-Fund was created declared that the responsible entity held the assets on trust for the members of the DomaCom Fund as follows: 2.2 Declaration of Trust (a) The Assets shall vest in the Responsible Entity on the Commencement Date and the Responsible Entity declares that it shall hold the Assets on Trust for the Members in accordance with the terms of this Constitution. (b) The Responsible Entity shall clearly identify the assets as property of the Fund and hold the Assets separately from the assets of the Responsible Entity and any other managed investment scheme to the extent required by the Corporations Act. The declaration of trust thus effected was in significantly different terms from those which had been in the Constitution on 31 March 2015. Clause 2.2 at the time of creation of the units did not provide for separate trusts in respect of, relevantly, separate assets acquired in respect of particular classes of units. Clause 4.12 was also added to the Constitution which, for the avoidance of doubt, provided that the terms of the new Constitution were to give rise only to "a single trust" and that, notwithstanding any other clause in the Constitution, no unit or class of units gave "rise to a distinct trust". The new version of clause 2.2, however, also sought to ensure that the benefits and burdens of particular assets acquired on behalf of particular unit holders would be enjoyed or borne principally by them, albeit that those benefits and obligations might be subject to any general right of the trustee of indemnity or reimbursement. 16 The dispute between Aussiegolfa and the Commissioner about whether the in-house asset rules had been breached was, in part, a dispute between them about the identity of the investment and whether the Sub-Fund was to be regarded as a separate trust. Aussiegolfa contended that the relevant asset was its investment in the DomaCom Fund whilst the Commissioner contended that the Sub-Fund was a separate trust. The amendments to the Constitution made before the acquisition of the Burwood property may have intended to ensure that the Burwood Sub-Fund would not be a separate trust although that was not consistent with the provisions dealing with the beneficial interests in the fund and was inconsistent with the supplementary product disclosure statement dated 17 July 2015 which contained the following statement: Each Sub-Fund is a separate trust and the assets of one Sub-Fund are not available to satisfy liabilities in another Sub-Fund. In contrast to that statement, however, clause 4.12 of the Constitution provided that nothing in the Constitution gave rise to "a distinct trust". 17 Notwithstanding clauses 2.2 and 4.12, and disregarding the statement quoted above from the supplementary product disclosure statement about each sub-fund being a separate trust, the Constitution provided for the division of the "beneficial interest" in the fund to reflect the objective of ensuring that the holders of specific classes of units would enjoy or bear exclusively (albeit subject to any general right of the trustee of indemnity or reimbursement) all of the benefits and burdens referrable to specific assets acquired by the responsible entity as trustee on behalf of an investor. Clause 4 dealt with the beneficial interests created in the trust and provided: 4 Interests and Units and Unit Holders 4.1 Interests and Units (a) The beneficial interest in the Fund is divided into: (i) interests in the Cash Pool based on each Cash Holder's proportionate interest in the Cash Pool; and (ii) Units. (b) Subject to the rights attaching to a Class of Units, each Unit confers on the Unit Holder a beneficial interest in the Assets as an entirety and does not confer an interest in a particular Asset. 4.2 Fractional Units (a) The Responsible Entity may issue fractions of a Unit calculated to the fourth decimal place or such other number of decimal places as the Responsible Entity determines. (b) This Constitution applies to fractions of Units in proportion to which the fraction bears to one Unit. 4.3 Consolidation, subdivision and conversion of Units (a) Subject to this Constitution and the Corporations Act, the Responsible Entity may consolidate, divide or convert the number of Units on issue into any number of Units other than the number into which the Assets are for the time being divided. (b) A division, consolidation or conversion of a kind referred to in clause 4.3(a) must not change the ratio of Units in a Class registered in the name of any Unit Holder to the Units on issue in that Class. (c) The Responsible Entity must amend the Register to record any consolidation or division of Units. 4.4 Classes (a) Subject to this Constitution and the Corporations Act, the Responsible Entity may create different Classes of Units in the Fund. If the Responsible Entity so determines in relation to a particular Class, the terms of issue of those Units in that Class may: (i) have different rights, obligations and restrictions; and (ii) provide for conversion of Units from one Class to another Class and, if the Responsible Entity so determines, change the number of Units on such a conversion. For the avoidance of doubt, each Cash Pool is a separate Class of interest in the Fund. (b) The Responsible Entity in making any determination of a variable properly referable to a Class under this Constitution must ensure that: (i) any variable which relates only to a particular Class, and does not relate to other Classes, is solely referrable to the Class to which it relates; and (ii) any variable that relates to more than one Class is apportioned between those Classes either: (A) in the same proportions as the aggregate value of Units on issue in each Class as at the most recent Valuation Time bears to the aggregate value of Units in all Classes to which the variable relates on issue at the most recent Valuation Time; or (B) if the methodology referred to in clause 4.4(b)(ii)(A) would result in the Responsible Entity breaching its obligation to treat Unit Holders who hold different Classes fairly in contravention of section 601FC((1)(d) of the Corporations Act, then the Responsible Entity must apportion the relevant variable that relates to more than one Class in a manner that treats Unit Holders in different Classes fairly. (c) Notwithstanding the generality of this clause 4, the Responsible Entity must only issue Classes of Units in the following circumstances: (i) the Relevant Scheme Assets for each Class comprise specific Assets and all proceeds and income received by the Responsible Entity in respect of, or relating to, those Assets; (ii) the Relevant Liabilities are attributed to a Class such that they can only be met from Relevant Scheme Assets; (iii) Relevant Scheme Assets for a Class are not encumbered in relation to Relevant Liabilities of another Class; and (iv) the Responsible Entity is not entitled to be indemnified out of the Relevant Scheme Assets of a Class in relation to Relevant Liabilities of another Class. (d) Within 7 days of the first issue of Units in a Class, the Responsible Entity must notify ASIC of the establishment of that Class. 4.5 Equal value At any time, all the Units in a Class are of equal value and rank equally. 4.6 Rights attaching to Units (a) A Unit Holder holds a Unit subject to the rights and obligations attaching to that Unit. (b) Each Unit Holder agrees not to: (i) interfere with or question the rights, powers, authority, discretion or obligations of the Responsible Entity under this Constitution; (ii) exercise any right, power or privilege in respect of an Asset; (iii) lodge a caveat in respect of any Asset; or (iv) require that any Asset be transferred to the Unit Holder or any other person. (c) A Unit Holder may not create any mortgage, charge, pledge, lien, encumbrance, arrangement for the retention of title or any other Security Interest over a Unit without the consent of the Responsible Entity. 4.7 Directions Members cannot give any direction to the Responsible Entity if it would require the Responsible Entity to do or omit to do anything which: (a) may result in the Responsible Entity acting contrary to the law; or (b) would otherwise be within the scope of any discretion or power expressly conferred on the Responsible Entity by this Constitution. 4.8 Joint holders Where two or more persons are registered as the holders of a Unit or an interest in the Cash Pool they are, for the purpose of the administration of the Fund and not otherwise, deemed to hold the Unit or beneficial interest in the Cash Pool as joint tenants and not tenants in common, on the following conditions: (a) the Responsible Entity shall not be bound to register more than three persons as joint Unit Holders of the Unit or as Cash Holders of an interest in the Cash Pool; (b) the joint Unit Holders or Cash Holders shall be jointly and severally liable in respect of all payments including payments of Tax that ought to be made in respect of the Unit of the Cash Pool (as applicable); (c) on the death of a joint Unit Holder or Cash Holder, the survivor or survivors shall be the only person or persons whom the Responsible Entity will recognise as having any title to the Unit or the beneficial interest in the Cash Pool, subject to the production of any evidence of death that the Responsible Entity requires; (d) any one of the joint Unit Holders or Cash Holders may give an effective receipt that discharges the Responsible Entity in respect of any payment or distribution; and (e) only the person whose name appears first in the Register as one of the joint Unit Holders of a Unit or Cash Holders shall be entitled to delivery of any notices, cheques or other communications from the Responsible Entity, and any notice, cheque or other communication given to that person is deemed to be given to all the joint holders, unless the Responsible Entity determines otherwise. 4.9 Benefits and obligations of Unit Holders Except where expressly provided in this Constitution to the contrary, all benefits and obligations contained in this Constitution apply for the benefit of and bind each Cash Holder and Unit Holder to the extent provided in this Constitution. 4.10 Perpetuities The Responsible Entity cannot issue any Units or an interest in the Cash Pool after the 80th anniversary from the day before the Commencement Date if that issue would cause a contravention of the rule against perpetuities or any other rule of law or equity. The preceding sentence prevails over all provisions of this Constitution. 4.11 Applicant becoming Member An applicant for interests in the Cash Pool or Units does not become a Member until that applicant is entered on the relevant Register. Until that time, any application moneys received from that applicant will be held in accordance with section 1017E of the Corporations Act. An applicant who is dissatisfied with the processing of an application is entitled to make a complaint to the Responsible Entity in accordance with the dispute resolution processes established by the Responsible Entity in accordance with clause 27. 4.12 For the avoidance of doubt, the Assets vested in the Responsible Entity under this Constitution give rise to a single trust, and notwithstanding any other clause in this Constitution including clauses 2.2, 4.1 and 24, no Unit or Class of Units gives rise to a distinct trust. Clause 5 of the Constitution dealt with the process by which units might be acquired. Clause 5.1(a) provided that the responsible entity might offer a person who had deposited money in the Cash Pool to subscribe for units. The process thus contemplated for a new investor to deposit money in the Cash Pool in anticipation for subscribing for units and for the unit holders to have the beneficial interest in the fund attaching to those units. 18 Clause 5 of the Constitution also provided that no certificates would be issued for an interest in the Cash Pool or for units of a sub-fund unless otherwise determined by the responsible entity. Clause 5.8 provided that an interest in the Cash Pool would be taken to be issued on the happening of specified events, such as acceptance of an application and the receipt of money by the responsible entity in the Cash Pool. Clause 5.9 provided for units to be taken to be issued upon the happening of specified events as follows: 5.9 Issue of Units Unless otherwise determined by the Responsible Entity, Units are taken to be issued: (a) in the case of a Unit issued under a distribution reinvestment arrangement referred to in clauses 5.4 and 13.14, the first Business Day of the next Distribution Period following the Distribution Period in respect of which the Distribution Entitlement was calculated; or (b) in all other cases, on the Issue Date immediately after the later of the day on which: (i) the Responsible Entity accepts the application for Units and the applicant is registered as a Unit Holder of the Unit on the Register; or (ii) the Responsible Entity receives the application money, or the property (which is acceptable to the Responsible Entity) against which the Units are to be issued is vested in the Responsible Entity, and for the avoidance of doubt, the relevant Distribution Entitlement, application money or property against which the Units are issued (as applicable) become Assets of the Fund at the time of issue. The units in the Burwood Sub-Fund acquired by Aussiegolfa in the present case were issued between July and August 2015. DomaCom provided various statements in relation to the Benson Fund, including a periodic statement and transaction history for the period from 1 July 2015 to 30 June 2016. That statement showed the creation of units on 23 July 2015 and 17 August 2015. A total of 2,944.25 units in the Burwood Sub-Fund described as Sub-Fund DMC0114AU, were issued on 23 July 2015 and a further 27,901.09 units were issued on 17 August 2015. 19 The application of the basic meaning of in-house asset for the purposes of the SIS Act requires identification of the relevant asset. The basic meaning given to "in-house asset" in s 71(1) is, relevantly, "an asset of the fund that is […] an investment in a related trust of the fund […]". "Asset" is defined by s 10(1) of the SIS Act to mean "any form of property" and, therefore, includes the units acquired by Aussiegolfa in the DomaCom Fund. The application of the meaning of in-house asset in s 71(1) thus depends upon whether the units acquired by Aussiegolfa consisted of an investment in a related trust of the Benson Fund. The term "investment" is not given a separate meaning in the SIS Act but "invest" is defined to mean the application of assets in any way, or the making of a contract, for the purpose of gaining interest, income, profit or gain. The acquisition by Aussiegolfa of units in DomaCom satisfies the requirement of being an investment for the purposes of s 71(1). 20 The more difficult question is whether the units are an investment "in a related trust of" the Benson Fund. Section 10(1) defines "related trust" of a superannuation fund to include a trust that a member of the superannuation fund controls within the meaning of s 70E which provides: Meanings of terms used in sections 70B, 70C and 70D Sufficient influence/majority voting interest (1) For the purposes of sections 70B, 70C and 70D: (a) a company is sufficiently influenced by an entity or entities if the company, or a majority of its directors, is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity or entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); and (b) an entity or entities hold a majority voting interest in a company if the entity or entities are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company. Control of trust (2) For the purposes of sections 70B, 70C and 70D, an entity controls a trust if: (a) a group in relation to the entity has a fixed entitlement to more than 50% of the capital or income of the trust; or (b) the trustee of the trust, or a majority of the trustees of the trust, is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of a group in relation to the entity (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); or (c) a group in relation to the entity is able to remove or appoint the trustee, or a majority of the trustees, of the trust. Group in relation to an entity (3) For the purposes of subsection (2): group, in relation to an entity, means: (a) the entity acting alone; or (b) a Part 8 associate of the entity acting alone; or (c) the entity and one or more Part 8 associates of the entity acting together; or (d) 2 or more Part 8 associates of the entity acting together. Definitions (4) For the purposes of sections 70B, 70C and 70D: company has the same meaning as in the Income Tax Assessment Act 1997. partnership has the same meaning as in the Income Tax Assessment Act 1997. Aussiegolfa accepted that the other holders of the units in the Sub-Fund, namely Mr Benson's mother and his sister's superannuation fund, were Part 8 associates for the purposes of these provisions. Thus, there was a group within the meaning of s 70E in relation to Aussiegolfa. It submitted, however, that it did not have fixed entitlements to more than 50% of the capital or income of the DomaCom Fund because it, together with Mr Benson's mother and his sister's superannuation fund, held less than 1% of the units in the DomaCom Fund. The same is not true, however, if the relevant trust is the Burwood Sub-Fund rather than the DomaCom Fund. 21 The SIS Act does not provide a definition of trust which is different from its usual legal meaning. A number of the provisions of the Constitution are consistent with the DomaCom Fund being a single trust and, as mentioned, clause 4.12 expressly provides that no unit or class of units "gives rise to a distinct trust". Despite those provisions, however, the Constitution created the Burwood Sub-Fund as a separate trust in respect of which a group in relation to the Benson Fund had a fixed entitlement to more than 50% of the capital or income of the trust. Clause 5.3 of the Constitution required the application by each member of the group, including Aussiegolfa, for an interest in units in conformity with the relevant disclosure documents. Clause 5.1 permitted the responsible entity to invite applications, and both the product disclosure statement dated 24 June 2015 and the supplementary product disclosure statement dated 17 July 2015 were invitations to participate in a proposed Sub-Fund with plans to invest in the Burwood property. The supplementary product disclosure statement specifically stated, as previously mentioned, that each Sub-Fund was "a separate trust" with the assets of one Sub-Fund not being available to satisfy liabilities in another Sub-Fund. Even putting that statement aside, however, the terms of the Constitution, consistently with the product disclosure statement and the supplementary product disclosure statement (which were both contemplated by the Constitution), require the conclusion that a trust was created in respect of the Burwood property held by the responsible entity through DomaCom. 22 Clause 4.1 expressly divided the "beneficial interest" in the DomaCom Fund as between interests in the Cash Pool and units (whatever else may have been intended by clause 4.12). Part of the beneficial interest in the fund was, thus, divided into units such that the responsible entity had separate fiduciary duties to the unit holders of the Burwood Sub-Fund. Clause 4.4 permitted the responsible entity to create different classes of units with distinctly different rights, obligations and restrictions and, for the avoidance of doubt, it was made clear that each Cash Pool was a separate class of interest in the fund. The units issued by the responsible entity could only be issued in respect of specific assets and all proceeds and income received by the responsible entity in respect of those assets were to be dealt with as the relevant scheme assets for the class comprising those assets. Each sub-fund related to an identifiable item of property which was held by the trustee on trust pursuant to the specific terms of the Constitution referable to that asset. The income and distributions of the fund were governed by clause 13 of the Constitution which provided that the whole of the net income in respect of each sub-fund is received by the holders of the units referrable to the sub-fund in accordance with a formula. The responsible entity may have trust obligations to other beneficiaries in respect of other property but it owes no fiduciary duties to the other beneficiaries in respect of the Burwood property which it holds for the benefit of the unit holders of the Burwood Sub-Fund. The rights and entitlements of the units in the Burwood Sub-Fund constitutes 100% of the distributable income from the Burwood property. The unit holders of the Burwood sub-fund are entitled to 100% of the capital relating to the Burwood property and no other member of DomaCom has an entitlement to the income or capital in relation to the Burwood property. Although clause 19.1 provided that the responsible entity had a general entitlement to indemnity, clause 4.4(c)(iv) provided that the responsible entity was not entitled to be indemnified out of the relevant scheme assets of a class in relation to relevant liabilities of another class. 23 These considerations apply also to the question of whether the investment fell outside the basic meaning of in-house assets by reason of the exclusion in s 71(1)(h). That provision excludes from the meaning of in-house assets "an investment in a widely held unit trust". Section 71(1A) defines a trust as a widely held trust for the purposes of s 71(1)(h) as follows: Widely held trust (1A) For the purposes of paragraph (1)(h), a trust is a widely held unit trust if: (a) it is a unit trust in which entities have fixed entitlements to all of the income and capital of the trust; and (b) it is not a trust in which fewer than 20 entities between them have: (i) fixed entitlements to 75% or more of the income of the trust; or (ii) fixed entitlements to 75% or more of the capital of the trust. For this purpose, an entity and the Part 8 associates of the entity are taken to be a single entity. Section 10(1) provides a definition of unit trust as: unit trust means: (a) a unit trust within the meaning of Division 6C of Part III of the Income Tax Assessment Act 1936 (whether established by a law of the Commonwealth or of a State or Territory, by a government agency or otherwise); or (b) the trustee of such a trust; as appropriate. The conclusion that the Burwood Sub-Fund is a separate trust carries the consequence that it is not a widely held unit trust within the meaning of s 71(1)(h). A unit trust does not become a widely held unit trust just because it is held by a trustee who holds other funds on trust with similar fiduciary duties to others. 24 The Commissioner submitted also that the units were not excluded from the basic meaning by the exclusion in s 71(j). That provision excludes from the meaning of in-house assets certain assets specified in the regulations. Regulation 13.22C provides that certain investments in a unit trust are excluded from the definition of in-house asset, but Regulation 13.22D provides that the effect of the exclusion ceases if certain events happen, including the unit trust becoming a party to a lease or a lease arrangement with a related party to the superannuation fund unless the lease or lease arrangement relates to business real property. The Burwood property is not business real property, as defined, for the purposes of the regulations and the leasing to Ms Benson is to a party related to the Benson Fund because she is a Part 8 associate within the meaning of s 10(1) and s 70B of the SIS Act. 25 The Commissioner also relied upon the determination made by the Commissioner on 3 July 2017 under s 71(4)(b) of the SIS Act that the units held by Aussiegolfa are to be treated as an investment in a related trust of the Benson Fund. Section 71(4) permits the Commissioner to make a determination where an asset consists of an investment which is not an in-house asset. The condition to the exercise of the power to make a determination depends, in other words, upon the relevant asset not otherwise falling within the meaning of in-house asset in s 71(1). Section 71(4) provides: (4) If: (a) apart from this subsection, an asset of a fund consists of a loan, an investment, or an asset subject to a lease or lease arrangement, other than an in-house asset; and (b) the Regulator, by written notice given to a trustee of the fund, determines that the asset is to be treated, with effect from the day on which the notice is given, as if the asset were a loan to, an investment in, or an asset subject to a lease or lease arrangement with, a specified related party or related trust of the fund, including a person taken to be a standard employer-sponsor of the fund under section 70A; then, despite paragraphs (1)(a) to (j), the asset is taken, for the purposes of this Part, to be a loan to or an investment in the related party or related trust, or an asset subject to a lease or lease agreement between a trustee of the fund and the related party. The effect of the determination made in the present case is that the units acquired by Aussiegolfa are taken to be an investment in a trust related to Aussiegolfa unless and until that determination is revoked by the Tribunal or is otherwise held to be invalid. The drafting of s 71(4) may not be as clear as it might be, but its purpose is to supply an element required in the operation of s 71(1), namely, that an asset of a superannuation fund be an in-house asset within the basic meaning of that provision. The definition in s 71(1) of an in-house asset makes an asset an in-house asset where, amongst other conditions, it consists of an investment in a related trust. A determination under s 71(4) supplies that condition upon which the definition may operate to cause the asset to be an in-house asset. 26 The conclusion that the investment was an in-house asset means, however, that there was absent the condition necessary for the Commissioner to make the determination under s 71(4)(b). It follows that the determination is invalid for that reason but Aussiegolfa did not rely upon that ground, but upon those grounds, as the basis of invalidity of the determination. The first ground relied upon by Aussiegolfa was that the determination had been made prematurely because the Court had not yet determined whether the asset was an in-house asset within the meaning of s 71(1). This ground cannot succeed and misconceived the nature of the function of the Court in deciding whether or not the asset was an in-house asset. A decision by the Court that the units were, or were not, in-house assets within the meaning of s 71(1) is not a legislative act but a judicial determination of the rights pre-existing the Court proceeding. The determination by the Commissioner depended upon the investment not being an in-house asset but the ability to make the determination depended not upon the Court's decision about it not being an in-house asset but, rather, upon the objective fact that it was not an in-house asset. The conclusion above, that it is an in-house asset, may therefore carry the consequence that the condition to the exercise of the power to make the determination was absent but any invalidity in making the determination was not because it was made prematurely. The second ground of invalidity was submitted to be that the Commissioner's determination was not final but was said to be conditional because the Commissioner's reasons for decision accompanying the determination had stated that the determination was issued "as an alternative to the primary position that the" investment by the Benson Fund was an in-house asset of the Benson Fund under s 71(1). This ground must also be rejected because the reason for making the determination does not impact upon its effect by operation of s 71(4)(b). The determination in form is not conditional and is given effect by operation of s 71(4)(b). The third ground was perhaps a variation of the preceding two, namely, that the Commissioner lacked power to make the determination because he did not have a genuine belief that the asset was not an in-house asset given his view that the asset was an in-house asset. This ground, however, proceeded on the erroneous assumption that the power to make the determination depended upon the Commissioner's opinion or state of satisfaction rather than the objective fact, as is the case, that an asset was not an in-house asset. The power to make a determination under s 71(4)(b) is not made to depend upon the Commissioner's opinion or state of satisfaction but is posited as an objective fact. The Commissioner may rely upon the objective fact as an alternative to the primary submission for which he contended by making a determination. 27 The Benson Fund must also comply with the sole purpose test in s 62 of the SIS Act which the Commissioner contended had been breached by the leasing arrangement with Ms Benson. A minor dispute that arose between the parties in that context was whether a lease for the property had yet been entered into by Ms Benson. Aussiegolfa submitted that a lease had not yet been entered into because it had not yet been signed on behalf of the landlord. Aussiegolfa's submission was somewhat curious since it sought declarations that the effect of the leasing arrangements would, amongst other matters, not cause the fund to breach the sole purpose test. The facts were that Ms Benson had applied for, and had signed a form of, lease. The lease itself may not yet have been signed on behalf of the owner but Student Housing Australia had written to her on 11 April 2017 congratulating her, on behalf of the owner, on securing the tenancy of the Burwood property. Whether or not there was a formal tenancy, however, is ultimately of little significance because the declarations it sought included a declaration that the leasing "would not cause" Aussiegolfa to breach the sole purpose test in s 62 of the SIS Act. Whether that declaration should be granted must, therefore, be considered on the footing that there was, or will be, a lease for the Court to make a declaration and the evidence was sufficient to proceed upon that basis. 28 Section 62 requires that a trustee of a regulated superannuation fund ensures that the fund be maintained solely for one or more of the core purposes specified in s 62(1)(a) or for one or more of those purposes and for one or more of the ancillary purposes specified in s 62(1)(b). The Commissioner contended that neither the core purposes nor the ancillary purposes include the provision of leased premises of an asset of a superannuation fund to a daughter of a member of a superannuation fund. 29 It is a question of fact whether the sole purpose test continues to be satisfied upon the grant of a lease to Ms Benson. In Randwick Corporation v Rutledge (1959) 102 CLR 54 Windeyer J said at 94 that when such words as "exclusively", "solely" or "only" are present in a statutory requirement it is a question of fact whether the requirement has been satisfied, and that they prevent use for any other purpose, however minor, which is collateral or independent as distinguished from incidental to the stipulated use. In Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 Gibbs ACJ said at 644-5: Was it used "solely" for those purposes? The question must be considered from the point of view of the University - was the use, by the University, solely for its purposes? The fact that the University derives some subsidiary and incidental benefit from using the land for its purposes does not mean that the land is not used exclusively for University purposes: Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation. In Randwick Corporation v. Rutledge, Windeyer J. said: "When such words" [as 'exclusively' or 'solely'] "are present, it is a question of fact whether the land is being used for any purpose outside the stipulated purpose ... As Kitto J. said in Lloyd v. Federal Commissioner of Taxation, such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipulated use." The word "solely" may do no more than add emphasis, or perhaps precision. The present is not one of those cases in which part of the land in question was used for one purpose, and part for another. The question is whether in letting the land, or in approving of the grant of the leases by the Union (whichever was technically the position), the University was pursuing the independent object of obtaining revenue from the rents. It was put in argument before us that the learned primary judge did not expressly find that the purpose of gaining revenue was only incidental, but that is, I consider, implicit in his findings. He found that the council of the University was "fully entitled to come to the conclusion that the establishment of the facilities in question was calculated to promote the objects and interests of the University by avoiding the necessity of students and staff seeking such facilities having to spend time travelling to other shopping centres". He further found that the land "should be regarded as used by the University for its purposes because, although leased to various tenants for commercial purposes, they provide facilities which the University considers to be necessary or incidental to achieving its purposes". It cannot be inferred from his findings, and the evidence does not suggest, that the University, in letting the land, was pursuing the independent purpose of raising money. The receipt of the rent by the Union was a subsidiary and incidental (although, no doubt, by no means a negligible) benefit from the use of the land for the purposes of the University. (Footnotes omitted). In this context the inquiry into purpose is not an inquiry into motive but into the "end sought to be accomplished": see News Limited v South Sydney District Rugby League Football Club Limited & Ors (2003) 215 CLR 563 at [18]. 30 A factual difficulty for Aussiegolfa in the present case about whether the leasing to Ms Benson causes Aussiegolfa to breach the sole purpose test arises from the candidly frank statement by Mr Benson that the use of the Burwood property by a lease to his daughter was to test "the related party use of residential property" within self-management superannuation funds. That statement bears upon an evaluation of the facts to determine whether the Benson Fund was maintained solely for the purposes contemplated by s 62(1) or also for the not incidental, but independent and collateral, purpose of providing housing for Ms Benson. An available inference from the evidence, including the frankly candid statement by Mr Benson, is that an investment in units in the DomaCom Fund was for the collateral purpose of the superannuation fund being used to provide accommodation to a person related to the superannuation fund. 31 Even without the inference from Mr Benson's statement, however, the facts do not support the conclusion that the leasing to Ms Benson would not cause Aussiegolfa to breach the sole purpose test. A high standard was adopted by s 62 of the SIS Act as an important pillar to ensure that self-managed superannuation funds achieve the objectives of providing retirement benefits and not current day use or benefits. A collateral purpose of providing housing for a relative is not amongst the core purposes, or the ancillary purposes, in s 62 and is inconsistent with the underlying objective of not providing present benefit or use to members of a self-managed superannuation fund or to relatives of the members. In Case 43/95 [1995] 95 ATC 374 the Administrative Appeals Tribunal said at [24]: 24. In addition to the above, it may be that there are isolated incidents which, viewed in the overall context of the way in which a superannuation fund is being maintained, are so incidental, remote or insignificant, that they cannot, having regard to the objects sought to be achieved by the Act, be regarded as constituting a breach of the sole purpose test. Such incidents will be rare. The legislature, by adopting the "sole purpose" test, has expressly determined that a strict standard of compliance should be adhered to. Under the Act, the test requires more than the presence of a dominant or principal purpose in the maintenance of a superannuation fund - it requires an exclusivity of purpose commensurate with that purpose being the "sole purpose". In the instant case, in the absence of other relevant factors, the fact that Mr A and his friend were enabled as the result of the investment by the fund, after paying the annual subscription fee, to play golf could by itself be regarded as so incidental or remote as to not amount to an infringement of the test. However, given that there were other relevant factors surrounding the way in which that asset was maintained and viewed in the context of the findings reached by the tribunal with respect to other investments made by the fund - in the units in Mr A's family trust and in the Sorrento property - a circumstance which in isolation may be insignificant or remote becomes more significant. Having regard to the totality of the way in which the three nominated assets - the shares in Z Pty Ltd, the Swiss chalet and the Sorrento property - were maintained, the tribunal is satisfied that Mr A had a second purpose, namely to make the assets available for his use and the use of his family and friends so that it could not be said that the "sole purpose" in the maintenance of the assets was for the benefit of the members of the fund. The fact that other assets of the fund may not have been utilised for a purpose other than a purpose to give benefits to the members has been considered by the tribunal but does not affect its decision. The facts in that case are plainly not the same as those in this proceeding, however, its reasoning is apt and broadly applicable. There may be circumstances in which a lease to a related party would not breach the sole purpose test but the evidence in this case is that the purpose of the investment by Aussiegolfa in student housing accommodation through DomaCom was, in part, to provide housing to Mr Benson's daughter. The Commissioner relied upon a number of other facts for that conclusion which were unpersuasive (such as the fact that Mr Benson was providing a guarantee and might be called upon to provide economic support to his daughter), but in this case it is sufficient that a purpose of the investment by Aussiegolfa in DomaCom was to provide accommodation to a relative of Mr Benson. The conclusion that the sole purpose test would be breached by the lease to Ms Benson is not also required by the fact that Mr Benson gave a parental guarantee, or was the person who forwarded the application for his daughter to the agent, but is required by the fact that a purpose of Aussiegolfa in acquiring the units in the DomaCom Fund was to provide accommodation to a relative of Ms Benson. 32 Accordingly, the application will be dismissed with costs. The proceeding will, however, be listed for submissions about whether there should be a declaration that the determination made by the Commissioner under s 71(4)(b) was invalid notwithstanding that the invalidity was not found on the grounds advanced by the applicant. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.