Self Managed Superannuation Funds – Is it for Retirement?

A fundamental requirement is that superannuation funds meet a sole purpose test – the provision of retirement benefits.  If it appears that there is a different purpose, the fund can become non-complying.

The auditor, the tax office and the court, will look at all the circumstances to form an opinion.  If that happens, the trustee will have difficulty proving them wrong.  (That is called burden of proof).

Is it likely that a purchase of a residential property and leasing it to a child, who doesn’t pay rent or pays less than market rent, would be to the benefit of the members?

Do you think the purchase of a caravan or a motor vehicle or some hobby farm expenses, is for the benefit of members at their retirement?

It is highly likely that the answer to those questions is no and therefore the fund is not being provided for the sole purpose of providing retirement benefits.

That means that the fund becomes non-complying.  It could also mean that the trustees are liable to pay penalties personally and quite substantial ones.

It is not easy always to determine whether something is for the sole purpose of retirement benefits, but one example recently was decided on the basis that the provision of rental income was on non arms length terms to the member's son.

 

Source:  Written for AcctWeb by a Melbourne accounting firm

Cristy Houghton

Embarketing, 48 Johnston Street, Wagga Wagga, NSW, 2650

Cristy's unique career has taken her from country NSW to the city lights of Clarendon Street South Melbourne and back again. With an early career in radio as a copywriter and creative strategist, she is now a Jill of all trades as a graphic designer, website builder, blog writer, video editor, social media manager, marketing strategist and more. 

In fact, give her any task and this chick will figure out how to do it! Go on, we dare you!

No, really, we DARE you!!

Cristy has won two Australian Commercial Radio Awards (ACRAs) for Best Ad and Best Sales Promotion, and even has an 'Employee of the Year' certificate with her name on it.

Cristy and her husband James have traveled extensively through Russia, China and South East Asia, and have two fur-babies, Sooty (cat) and Panda (puppy). Cristy loves drinking coffee, meeting people to drink coffee, coffee tasting and coffee flavoured cocktails. She also enjoys road trips, TED Talks and watching cat videos on youtube.