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  • In-house assets

    An in-house asset is any of the following:

    • a loan to, or an investment in, a related party of your fund
    • an investment in a related trust of your fund
    • an asset of your fund that is leased to a related party.

    There are some exceptions, including:

    In-house assets can't be more than 5% of your fund’s total assets.

    If, at the end of a financial year, the level of in-house assets of a self-managed super fund (SMSF) exceeds 5% of a fund’s total assets, the trustees must prepare a written plan to reduce the market ratio of in-house assets to 5% or below. This plan must be prepared before the end of the next following year of income. For example, if an SMSF exceeds the 5% in-house asset threshold as at 30 June 2018, a plan must be prepared and implemented on or before 30 June 2019.

    Dealing with the impact of COVID-19

    Many SMSFs will experience a drop in asset values due to the economic impact of COVID-19. This could result in the fund's in-house assets being more than 5% of the fund's total assets, thus breaching the in-house assets rules as at 30 June 2020. These funds are required to prepare and implement a rectification plan by 30 June 2021.

    We will not undertake compliance activity if you were unable to execute the rectification plan for your fund before 30 June 2021 because the market has not recovered, or it was unnecessary to implement the plan as the market had recovered. This compliance approach also applies where the SMSF exceeded the 5% in-house asset threshold as at 30 June 2019 but has been unable to rectify the breach by 30 June 2020.

    See also:

    Unpaid trust distributions

    If your SMSF is entitled to a distribution from a related trust, but you allow it to remain unpaid, you may contravene:

    • the in-house-asset rules
    • the arm's length rule
    • the sole purpose test.

    See also:

    • SMSFR 2009/3: Self Managed Superannuation Funds: application of the Superannuation Industry (Supervision) Act 1993 to unpaid trust distributions payable to a Self Managed Superannuation Fund
    Last modified: 31 Jul 2020QC 42464