A lot is being made out of the SMSF’s risk of borrowing. Funnily, and it cannot be a coincidence, that most of the vitriolic attack is launched by the big funds which have suffered immeasurably due to the growth of the SMSF industry. Now, the only avenue left to them is to malign SMSF. So, they talk about SMSF’s borrowing risk, lack of prudential regulations, and tax evasion, among other things. Let’s go through some of the illogical claims made by the SMSF attackers.
An article published on the website Mortgage Business talks about the recent Australian penchant for online SMSF property advice. There is a clear hike in the number of investors seeking online videos for their property themes.
In the event of breaching the SIS Act pertaining to loan to members, SMSF trustees can face exorbitant fines going up to $220,000. One such fine of $50,000 was handed down by the Federal court to a couple who were corporate trustees of a fund.
Does an SMSF loan to a property trust constitute an in-house asset transaction? According to Interpretive Decision ATO ID 2014/23, it cannot be termed as an in-house asset transaction as the property trust is not a related party because the SMSF does not own any units in the property trust, the loan is made through a commercial agreement and related parties to the SMSF own less than 10% of the units in the property trust.
What if your SMSF shares a bank account with various ‘related’ unit trusts? ATO guideline ‘ID 2014/7’ clearly marks out the course of action in such an event and talks about the regulations pertaining to keeping your SMSF money and assets segregated.
SMSF’s fortunes have seen quite an upswing after the global financial crisis turned away investors somewhat from the traditional Supers. Not without reasons though have they made their place in the hearts of millions. It is well known that they offer tremendous amount of flexibility even as they offer you a degree of control not equalled by any other form of Super. After all, you are managing your own affairs here.
If you go through the Canberra Times, you will find an article by Julieanne Strachan that talks about a number of baby boomers returning to full-fledged or part time work because their Superannuation savings does not have enough legs to carry them through their post-retirement life.