SMSF News - edition 19

Have you considered all the risks involved in a self-managed superannuation fund (SMSF) loan?

As an SMSF trustee or director of the corporate trustee, you must be aware of your SMSF's investment restrictions.

Unless there is a specific exception under the super law, SMSF trustees cannot lend money of the fund, or provide financial assistance, to a member of the fund or a member's relative.

If you do lend money from your SMSF, make sure the loan arrangement is really in the best interest of your fund. If not, there may be serious consequences for the SMSF, its members and you personally as the trustee of the fund. You could be putting members' benefits at risk, your SMSF could be made non-complying and therefore not qualify for concessional tax treatment, and you could be disqualified from acting as a trustee of the fund.

Your fund's investments must be made and maintained at arm's length. The sale and purchase prices of your fund's assets must reflect their market value.

To know what we consider to be an appropriate SMSF loan arrangement, refer to SMSFs and lending