Guide to self-managed superannuation funds

The sole purpose test

Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds. This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement.

If you or any party directly or indirectly obtain a financial benefit when making investment decisions and arrangements (other than increasing the return to your fund), it's likely your fund will not meet the sole purpose test. When investing in collectables such as art or wine, you need to make sure that SMSF members don't have use of, or access to, the assets of the SMSF. The most common breaches of the sole purpose test are:

• investments that offer a pre-retirement benefit to a member or associate
• providing financial help or a pre-retirement benefit to someone, to the financial detriment of your fund.

Sections within Managing your fund's investments

• Your investment strategy
• Restrictions on investments
• Ownership and protection of assets
• The sole purpose test
• Investing in collectables and personal use assets