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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).

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Superannuation for Women

January 18, 2019

It’s no secret that the median super balance for Australian women at the time of retirement is significantly lower than that of their male counterparts. The Australian Commission & Investments Commission (ASIC) have reported that men retire with about twice the amount as women. The discrepancy is reportedly even higher between Mums and Dads. Between lower wages and a higher likelihood of having an interrupted working life for women, women also tend to live longer and thus require more super to cover more years. Unfortunately, between personal finances, business financial capabilities, and governmental policies, actions to close this gap can be limited.

Where viable, private companies can consider: