“A non-related unit trust is far more flexible than a non-geared unit trust which has the restrictions in Division 13.3 A of the SIS Regulations. Under a non-related trust you can still borrow, and give a mortgage over trust assets, and in theory can still conduct a business.”

However, Butler said, there are still issues using a non-related unit trust under section 66 of the SIS Act.

“Section 66 is where a super fund is prohibited from acquiring from a member or related party unless, typically, it's business real property or listed security,” he said.

He added that a non-related unit trust may be relevant when structuring an investment with two or more non-related groups.

Butler used an example of the Rex, Finn and Jones SMSF, where each member owns a third of units in the RFJ Unit Trust.

“One member from each fund is a director and shareholder and shares in the trustee are split a third each, with no casting vote. None of Rex, Finn and Jones (including their related parties) has control or ‘sufficient influence’,” he said.

“The RFJ UT being a non-related unit trust can borrow money and charge its assets as security, much like a pre-1999 unit trust, however, is it as simple as this? You have to also consider the issue of sufficient influence and about 50/50 arrangements.“

Butler continued that in comparison a non-geared unit trust can be a sound structure for holding property.

“Non-geared unit trusts can provide creeping acquisitions where an SMSF increases its unit holding over time and the member and/or family trust decreases its unit holdings,” he said.

“Additionally, under TA 2012/7 dealing with SMSF arrangements to acquire property which contravene superannuation law, it states: ‘an SMSF's investment in a related unit trust is excluded from the definition of an in-house asset where the unit trust complies with the regulatory requirements contained in Div 13.3A of the … (SISR). Therefore, such investments are excluded from the calculation of the five per cent limit. Furthermore, the general prohibition on SMSFs acquiring assets from a related party does not apply where the SMSF's investment is in a unit trust which complies with those requirements’.”

He continued that non-geared unit trusts can provide the ability to inject further capital into an acquisition such as for improvements, and they are relatively easy to establish.

“To set up a non-geared unit trust you need a corporate trustee and a unit trust deed, and we would generally put in a fixed unit trust,” he said.

“But while it's easy to set up, it's equally easy to blow up. All you have to do is fail one of those criteria in Div 13.3A of the SISR, such as letting the bank account go into overdraft, and then all the units become in-house assets which need to be disposed of by the next 30 June. It becomes very costly to unwind and dispose of assets in a non-geared unit trust.”