Several investment restrictions apply to transactions involving 'related parties' of your fund and 'relatives of members'. No one associated with your fund should get a present-day benefit from its investments.
Your fund needs to be maintained for the sole purpose of providing death or retirement benefits to your members or their dependants.
Media: SMSF - Related party transactions
https://tv.ato.gov.au/ato-tv/media?v=bd1bdiub8cjgsdExternal Link (Duration: 03:01)
A 'related party' of your fund includes:
- all members of your fund
- associates of fund members, which include
- the relatives of each member
- the business partners of each member
- any spouse or child of those business partners
- any company the member or their associates control or influence
- any trust the member or their associates control.
- standard employer–sponsors, which are employers who contribute to your super fund for the benefit of a member, under an arrangement between the employer and a trustee of your fund
- associates of standard employer–sponsors, which include
- business partners and companies or trusts the employer controls (either alone or with their other associates)
- companies and trusts that control the employer.
A relative of a member means any of the following:
- a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse
- a spouse of any individual specified above.
Dealing with the impact of COVID-19
Some landlords are giving their tenants rent relief as a rent reduction, waiver or deferral because of the financial effects of COVID-19 and we understand that your fund may wish to do so as well.
Charging a related party a price that is less than market value usually breaches a number of SMSF rules.
Our compliance approach for the 2019–20 and 2020–21 financial years is that we will not take action if an SMSF gives a tenant – even one who is also a related party – a temporary rent reduction, waiver or deferral because of the financial effects of COVID-19 during this period.
If your fund holds an interest in an interposed entity such as a non-geared company or unit trust and that interposed entity leases property to a tenant, we will not treat the investment in the interposed entity as an in-house asset for the current and future financial years as a result of a deferral of rent being provided to the tenant due to the financial effects of COVID-19.
Note: If there are temporary changes to the terms of the lease agreement in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change. You can do this with a minute or a renewed lease agreement or other contemporaneous document.
See also:Several investment restrictions apply to 'related parties' of your fund and 'relatives of members'. No one associated with your fund should get a present-day benefit from its investments.