Loans to members continue to be the highest reported contravention of the superannuation laws that the ATO sees in auditor contravention reports.

Self-Managed Super Funds (SMSF) trustees should remember that they cannot loan money or provide other forms of financial assistance to a member or relative, and if they do, they can incur a penalty of up to $18,780. They may also be disqualified as a trustee.

SMSF trustees also cannot loan money to a related party, such as a business, where the value of the loan exceeds 5% of the value of the fund’s total assets, as this is a prohibited ‘in-house asset’ investment.

If the SMSF’s in-house assets exceed 5% of the total value at the end of the financial year, the trustee must plan to reduce their in-house assets to less than 5%, which must be implemented by the end of the following financial year.

If a trustee has made a prohibited loan from their SMSF, the loan must be repaid as soon as possible.

CategoryTax Tips, Tax Updates

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