CALL US: (07) 3367 0999 | EMAIL US:

Who is a ‘related party’ in an SMSF?

Self-managed super funds (SMSFs) have a number of investment restrictions which apply to transactions conducted within the fund.

One such restriction applies to transactions involving ‘related parties’ of the fund and ‘relatives of members.’

No one associated with the SMSF should obtain a present-day benefit from the fund’s investments. The fund needs to meet the ‘sole purpose test’ of providing death or retirement benefits to the SMSF members or their dependents.

A breach to the investment restrictions may result in significant penalties, such as the disqualification of a trustee and even prosecution.

The Tax Office considers a ‘related party’ as:

– 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

The ATO considers a ‘relative of a member’ as a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse; or a spouse of any individual specified previously.

Generally, SMSFs cannot borrow money and cannot buy assets from, or lend money to, fund members or other related parties (although there are exceptions to this rule).

Business
advice

taxation
planning

compliance
services

News

Pros and cons of home reversion

February 25, 2021

Super (AU): Pros and cons of home reversion

Home reversion is when you sell a share of the future value of your home whilst still living there. You receive a lump sum payment and continue to own the remaining share of your home equity.

Pros

Cons