.png)
The SMSF has invested in a Pty Ltd company (holds 50%, another SMSF holds 50%), that company has borrowed from a Pty Ltd that is related to the members of the SMSF. There is no loan documentation. Is this a breach of the borrowing rules?
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 Patrick
Thanks. The SMSF has invested in an unrelated party (being a company that it does not majority own or control and it does not own greater than 50% of the shares). I assume the other SMSF that owns the other 50% is not a related party to the SMSF & its members.
The company has borrowed from a company that is related to the SMSF & there is no loan documentation.
My view is that this is not a breach of the borrowing rules (as the Fund has not borrowed) however you will need to review compliance with SIS re:
1) Section 62 - sole purpose test
2) Section 82 - 85 - in-house asset rules
3) Section 109 - arm's length / commercial investment
4) Reg 4.09 - investment strategy
If other forum members have a view please let the forum know.
Thanks
SMSF AAA