Explains what an in-house asset is, the transitional rules that apply to certain assets owned before 11 August 1999 and the changes that will apply after 30 June 2009.
It is important that as a trustee of a self managed superannuation funds (SMSF) that has assets affected by the transitional rules, you review your funds investment structure to ensure they continue to comply with the in-house asset rules after 30 June 2009.
These guidelines are intended to apply to SMSFs only. If you are a trustee of another type of fund you should seek advice from the Australian Prudential Regulation Authority (APRA).
The basic meaning of an in-house asset of a superannuation fund is an asset of the fund that is:
- a loan to, or an investment in, a related party of the fund
- an investment in a related trust of the fund, or
- an asset of the fund that is subject to a lease or lease arrangement between you, the trustee of the fund, and a related party of the fund.
This applies to loans, investments and leases or lease arrangements after 11 August 1999. If your SMSF has pre-11 August 1999 in-house assets, different rules apply.
For more information about pre-11 August 1999 in-house assets and the different rules that apply, see ‘What transitional provisions apply to in-house assets?’.
A list of asset categories that are not in-house assets of a superannuation fund can be found in subsection 71(1) of the Superannuation Industry (Supervision) Act 1993 (the SIS Act) from paragraph (a) to (j).
Under paragraph 71(1)(j) of the SIS Act, an asset is not an in-house asset of a superannuation fund if it is included in a class of assets which is specified in the regulations as not being in-house assets of a fund or a particular class of funds. For more information, see Division 13.3A of the Superannuation Industry (Supervision) Regulations 1994 and the ATO’s Self Managed Superannuation Fund Determination No. SMSFD 2008/1.
Generally, as a trustee of a SMSF you are not permitted by the in-house asset rules to lend to or invest in a related party or related trust of the fund, or lease an asset of the fund to a related party of the fund, that is greater than 5% of the market value of the fund's total assets.
If your SMSF has in-house assets with a value of more than 5% of the market value of the fund’s total assets, you risk:
- disqualification
- the fund being made non-complying
- a range of other penalties
- the inability to purchase further in-house assets, and
- prosecution.
Section 71(1) of the SIS Act explains the meaning of an in-house asset.
Last Modified: Tuesday, 26 February 2008
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