Monday, 5 November 2012

Avoiding the Superannuation Contribution Restrictions


Avoiding the Superannuation Contribution Restrictions
A related party loan is where the members of a SMSF lend it money. This can be done at zero interest rate, currently with the ATO’s blessing, According to the minutes of the Superannuation NTLG minutes for June 2012. In ID 2010/162 the ATO only specifies that the related party cannot charge more than market rates and states the member can charge less than market rates. The loan must still be limited recourse. Which means the lender can only recover the asset purchased with the borrowed funds with no recourse to the other assets of the SMSF.
So why would you make an undeducted contribution to your SMSF that is locked away until you retire when you can lend the money instead and access it at any time yet its earns and gets the benefit of the SMSF tax rate.
If you would like to know more about SMSFs here is a link to our free booklet
http://www.bantacs.com.au/booklets/SMSFs_Booklet.pdf