SMSF Loans

The money in your smsf is not available to be used until you meet a condition of release, and generally trustees who break this rule will face severe penalties.

There are some exceptions to the smsf loans  rule, in that a loan can be made to related parties provided it does not exceed 5% of the fund’s total assets, and it is made on commercial terms. The Australian Taxation Office have outlined their view on smsf loans in SMSF Ruling 2008/1.

As a rule of thumb, smsf loans are considered to be early access to benefits which will make the fund a non compliant super fund. SMSF trustees who are considering making a smsf loan to one of its members should seek professional advice on the matter to be sure they are not putting the fund’s complying status at risk.

As well as severely restricting smsf loans made to a member, the SIS Act also restricts the ability for a fund to take out a loan. Generally speaking, a self managed super fund can only take out a loan in limited circumstances. These circumstances include loans to cover short term liabilities for cashflow, and in limited circumstances to acquire an asset.  For more information on smsf loans taken out by a fund, see smsf borrowing.


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