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  • Related parties and relatives

    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.

    Watch:

    Media: SMSF - Related party transactions
    http://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:

    Last modified: 31 Jul 2020QC 42467