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We are preparing a superfund for 2020/2021 and in the process, we found out that the member withdrew money in the 2021/22 year and put it in their personal offset account, $250,000. This amount has been repaid in full, but after several months of the member's use of it. Of course, it triggers a contravention report, but our question is what is the interest rate should we use? As we could not find the interest/detriment rate to use for the fund to compensate it for the lost earnings on the ATO website
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Hi Margaret
There is no prescribed interest rate per the ATO on loans to members / related parties. To comply with section 109 the interest rate must be based on an arm's length / commercial basis.
My view is you could use the division 7A benchmark interest rate that has been 4.52% since 1 July 2020.
Some accountants / auditors will want a higher interest rate on the basis that the loan was made on an unsecured basis. If other members have a view as to what rate is acceptable that would be great to hear.
Thanks
SMSF AAA