.png)
Would this be considering as carrying a hosting business?
top of page
THE AUDITORS INSTITUTE | FORUM
Archived Forums
When you become a member of The Auditors Institute, you immediately gain access to expertise, advocacy for your profession and peace of mind.
Ask a question in our members-only forum or use the search function to find prior technical discussions on your topic. You can expect a response within 24-48hrs.
Disclaimer
The forum is made available by The Auditors Institute Ltd for the benefit of it’s members only, and its primary purpose is to facilitate education, training, and discussion between members. The information and answers provided within the forum are of a general nature and do not consider any specific circumstances, objectives, financial situation or needs related to the matter/s raised. The responses should not be construed as financial advice, and each Member should seek their own professional advice before making any decisions. The Auditors Institute Ltd and its representatives are not responsible for any actions taken based on the information provided in the forum.
bottom of page
Hi Anna
I have not come across this query before.
My view is that if it was done on an arm's length / commercial basis then it could be done.
The "investment" would need to be allowed for under the Fund's investment strategy and there is a concern that this could be considered that the Fund is running a business and may be in breach of the sole purpose test.
I would recommend that the trustees get legal advice before they enter into the lease / sublease.
In relation to the business issue I note the ATO advises as per the below
Thanks
SMSF AAA
Per the ATO:
"Carrying on a business in an SMSF
Self-managed super funds (SMSFs) are not prohibited from carrying on a business, but the business must be:
allowed under the trust deed
operated for the sole purpose of providing retirement benefits for fund members.
The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts. You should get professional advice before carrying on a business through your SMSF.
Sole purpose test
If the trustee of an SMSF carries on a business, we examine the activities closely to ensure the sole purpose test is not breached. Cases that attract our attention include those where:
the trustee employs a family member (we look at things such as, the stated rationale for employing the family member and the salary or wages paid)
the 'business' is an activity commonly carried out as a hobby or pastime
the business carried on by the fund has links to associated trading entities
there are indications the fund's business assets are available for the private use and benefit of the trustee or related parties."