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Kylie Wee

Apr 11, 2023

Loan to ex- spouse

in SMSF Technical Forum

Hi All,

Recently I came across with a Fund lending money to the trustee member's ex-spouse. The loan was made after the divorce and was made at arm's length. Is this loan considered a loan to related party of the Fund and a breach of S 65 of SISA?

Thank You

Regards,

Kylie

1 comment

Comments (1)

THE AUDITORS INSTITUTE

Apr 11, 2023

Hi Kylie

Section 65 of SIS states that a Fund cannot lend money or provide financial assistance to a member or a relative of the member.

Relative is defined in section 10 of SIS as:

relative of an individual means the following:

(a) a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the individual or of his or her spouse;

(b) a spouse of the individual or of any other individual referred to in paragraph (a).

As an ex-spouse is not considered a relative re this section a Fund can lend money to them on an arm's length basis. (The same consideration applies for the in-house asset rules)

Thanks

SMSF AAA