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Restrictions on investments

Check if your investments on a commercial 'arm's length' basis.

29 September 2016

All investments by your SMSF must be made on a commercial ‘arm’s length’ basis. The purchase and sale price of fund assets should always reflect true market value, and the income from fund assets should always reflect a true market rate of return.

 

Generally:

  • you can't buy assets from, or lend money to, fund members or other related parties (there are some exceptions to this rule)
  • your fund can't borrow money.

If you don't comply with the investment restrictions we may impose significant penalties, including disqualifying you as a trustee and even prosecution. It's a good idea to speak to an SMSF professional to make sure your investments comply with the law.

Find out about:

Several investment restrictions apply to 'related parties' of your fund and 'relatives of members'.

You can't lend money or provide direct or indirect financial help from your fund to a member, or a member's relative.

Your fund can't acquire an asset from a related party unless it meets obligations.

Check to see why in-house assets can't be more than 5% of your self-managed super fund's (SMSF's) total assets.

Business real property is an exception to the in-house asset and related party acquisition rules.

Check if your fund invests in collectables or personal use assets.

Check borrowing, your fund can borrow money only in very limited circumstances.

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