Hot Issues
spacer
Vaccination rates as they happen around the world
spacer
Approaching the dawn
spacer
Videos and other resources for our clients
spacer
Retirement the ‘number one trigger’ for financial advice
spacer
‘Unfinished superannuation business’ to watch for in 2021
spacer
Superannuation ideas for 2021
spacer
Retirees need new super investment approach
spacer
Returning expats reminded on tax snares with pensions, investments
spacer
2020 is coming to an end. Phew!!
spacer
ATO flags key deadlines for early release of super
spacer
Retirement costs rising despite COVID impacts
spacer
Government targets fund expenditure, best interests in new super reforms
spacer
Small SMSFs develop rapidly
spacer
Investing basics for first timers
spacer
Behind the dash in new market listings
spacer
Super, death, and taxes
spacer
What millennials are thinking about investing and retirement
spacer
Capital preservation front of mind for SMSF returns
spacer
Comprehensive list of COVID-19 initiatives and packages.
spacer
Most SMSFs are still poorly diversified
spacer
Related party purchases must be clean
spacer
How your coming tax cut could pay off
spacer
Majority of retirees expected to fall short on retirement savings
spacer
Monitoring super performance critical in light of new measures
spacer
Budget 2020 - A very comprehensive break down.
spacer
Budget 2020 - Fact Sheets
spacer
Budget 2020 - At a Glance, Overview, Outlook
spacer
JobKeeper extension – changes implemented
spacer
Temporary home office expenses shortcut extended again
Related party purchases must be clean

 

Trustees must ensure any purchase from a related party is not a proxy for a loan or financial assistance to avoid breaching their obligations.

 

       

SMSF trustees making purchases of business real property from a related party for inclusion in their fund need to ensure the transaction is not a proxy for a loan to a member to avoid breaching trustee obligations, a technical expert has warned.

Colonial First State head of technical services Craig Day said SMSF trustees could make certain purchases from a related party, but any transaction had to be carried out at market value and without any obligations attached.

“There is a need to watch out for financial assistance because a fund is prohibited from lending money or providing any form of financial assistance to a member or a relative of a member,” Day said during a session on the use of lumpy assets in an SMSF at the recent Tax Institute National Superannuation Online Conference.

“Financial assistance includes a wide range of circumstances and can include any security, obligation or lien over fund assets that provides financial assistance to a member where it relies upon assets of the fund.”

He said it did not matter if the assets of the SMSF were impacted or not, but rather as soon as a member, or a relative of a member, relies on the assets to get financial assistance it was a breach of section 65 of the Superannuation Industry (Supervision) Act.

Any form of financing arrangements would also create a breach as an SMSF member cannot provide any sort of assistance that would constitute or look like the provision of finance to a member or a relative of a member, he said.

“An example that has been given of this is where a member owns commercial property and sells it into their SMSF, and uses the capital released to invest into their business and then later arranges to buy the business real property back off the fund in the way that would constitute the repayment of a loan,” he said.

“Most people would never do this because of the transaction costs involved, but if someone is desperate for investment, but can’t get a bank loan, then you do see these types of arrangements, and it is financial assistance and it breaches section 65.”

 

 

Jason Spits
October 26, 2020
smsfmagazine.com.au

 

Pattinson Financial Services Pty Ltd ABN 17 121 851 376 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd
ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

Tel: +61 2 8850 6888 | Fax: +61 2 8850 6407 | Toll Free 1300 466 637 | PO Box 6253 Baulkham Hills BC NSW 2153

site By PlannerWeb