Updated November 12th 2013

The ATO has issued an alert for SMSF trustees in respect of loans from the fund to a third party. A SMSF is prohibited from lending funds to a member and has very limited lending capacity to related parties.

However, a fund is permitted to lend funds to a third party where it complies with the investment strategy of the fund, does not put the funds assets at risk or provide the borrower with favourable conditions. When any super fund lends money, a written loan agreement should be in place which details the following conditions:

  • the repayment period
  • when repayments will be made
  • the amount of repayments
  • the interest rate
  • details of security for the loan