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.

Want to become a Member?

Join Now

Already a Member?

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.

To test this feature, visit your live site.

Christopher Skelding

Aug 24, 2022

Motor Vehicle - Lease back to Member

in SMSF Technical Forum

I have a new Fund I am auditing that owns 1 vehicle that is leased back to a member.

There is a commercial lease for the vehicle at market value in place.

The level of In-House Asset is less than 5% of the Fund.

Is this ok or is the Fund in breach?

Any comments would be appreciated.

Thanks

4 answers0 replies

Comments (4)

Christopher Skelding

Aug 31, 2022

What if the vehicle is leased back to the members business company for exclusive use to the member who is an employee of the company.

Does this make any difference?

Further comments would be appreciated.

Thanks

THE AUDITORS INSTITUTE

Aug 31, 2022

Replying to

Hi Chris

The SIS Regs at 13.18AA states "a trustee of the fund enters a lease arrangement with a related party".

The Regulations are referring to a related party not a member.

My view is that a lease of a motor vehicle to a related party is not allowed per SIS. If the employer is a related party then the Fund cannot lease a motor vehicle to it.

Thanks

SMSF AAA

SIS regs extract:

"SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994 - REG 13.18AA

Self managed superannuation funds--investment in collectables and personal use assets

(1) For section 62A of the Act, this regulation applies to investments involving any of the following ( section 62A items ):

(a) artwork (within the meaning of the Income Tax Assessment Act 1997 );

(b) jewellery;

(c) antiques;

(d) artefacts;

(e) coins, medallions or bank notes;

(f) postage stamps or first day covers;

(g) rare folios, manuscripts or books;

(h) memorabilia;

(i) wine or spirits;

(j) motor vehicles;

(k) recreational boats;

(l) memberships of sporting or social clubs.

Asset must not be leased to related party

(2) Each trustee of a regulated superannuation fund that is a self managed superannuation fund commits an offence if:

(a) the fund holds an investment involving a section 62A item; and

(b) either:

(i) an interest in the item is leased to a related party of the fund; or

(ii) a trustee of the fund enters a lease arrangement with a related party of the fund in relation to the item."