.png)
Is a commerical loan from Super fund to a company which a member is a director allowed?
Would it be classified as an in house asset?
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 John
A Super Fund loan to a company would only be an in-house asset if the company was deemed to be a related party. If the loan was an in-house asset it (& any other IHA's) cannot be more than 5% of the Fund's assets.
The IHA rules are complicated & are found in section 71 of SIS. A related party includes a member of the fund and any Part 8 associate. Normally any company that is majority owned or controlled by the member and his associates / relatives would be a related party & the IHA rules would apply to any such loans.
If the member was the sole director of the company (or owned more than 50% of its shares) then the company would be a related party. If the member is 1 of several directors and he does not majority own / control the company then it may not be a related party. You would need to know the facts and then apply that to the SIS legislation to see if a loan to the company would be treated as an IHA.
The Part 8 associates definition can be found at:
http://www5.austlii.edu.au/au/legis/cth/consol_act/sia1993473/s70b.html
If the company is not a related party you would need to also ensure no breach of section 65 if it could be argued there is an indirect financial advantage to a member. All loans would also need to be made on a commercial / arm's length basis as per section 109 of SIS.
Thanks
SMSF AAA