Loans to related parties

When a Self-Managed Super Fund (SMSF) lends money to members or their related parties, the loan constitutes as an in-house asset of the fund. However, it is not necessary that the fund has contravened Section 65 of the SIS legislation. The Australian Taxation Office (ATO) has provided an insight in SMSFR 2008/1 stating more factors need to be considered.

The flowchart below explains the workings of the SIS legislation.

Please click on image below to view larger version.

SMSF lends money diagram

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DISCLAIMER: This information is an interpretation of rules, regulations and standards. It should not be considered as general or specific advice and neither purports, nor is intended to be advice on any particular matter. No responsibility can be accepted for those who act on the contents of this publication without first obtaining specific advice. Liability limited by a scheme approved under Professional Standards Legislation.