The Australian Taxation Office has stepped up its compliance program for trustees of self managed super funds. Any trustee found to be in breach of the strict self managed super rules and regulations will lose its tax advantaged status and taxed at the highest marginal tax rate.
Don’t get caught out!
The most common SMSF breaches and areas to be aware of include the following:
- SMSF are prohibited to pay for personal expenses or lend money to a member of the super fund or an associate.
- SMSFs cannot buy or hold in house assets that are valued at more than 5% of the market value of the total assets within the fund. In house assets are generally assets that belong to a member of the fund or related party, such as a loan, investment or a lease arrangement.
- The sole purpose of an SMSF is to maintain the fund for the benefit of its members or their legal personal representative or members dependants after death. A SMSF isn’t allowed to provide any benefits to its members or associates.
- If the auditor of a SMSF requests a document in writing that related to an audit from the trustee, the trustee has 14 days to provide the auditor with his/her request.
- With the exception of an instalment warrant, SMSFs are not allowed to borrow money.
- Assets purchase for a SMSF must be in the correct name. If they aren’t in the correct name – the trustee of the SMSF – the fund’s assets will be at risk.
If you’re unsure whether you fund is in breach of strict superannuation rules and regulations, get professional assistance before it’s too late.