The Australian Taxation Office (ATO) has confirmed in ATOID 2014/23 that a loan from a self managed superannuation fund (SMSF) to a unit trust, where the SMSF and its related entities held less than 10% of the units in the unit trust, and did not otherwise ‘control’ the unit trust, will not be treated as an in-house asset.
While the view of the ATO is not a surprise, it does refute the common misconception that SMSFs cannot make loans to private companies and unit trusts. However, it is important to note that this only applies where the SMSF (and its related entities) do not ‘control’ the company or trust that it is providing funds to. If it does, the entity will be considered a related party of the SMSF and the loan will be treated as an in-house asset.
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