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Self-Managed Super - Be wary of financial pitfall |
A trustee or investment manager of a regulated super fund must not lend fund money to a member or their relative or give them any other financial assistance using fund resources. |
A couple planned that when they retired they would leave their farm to their daughter and sell off a block of land they had that wasn't attached to the main farming area. They decided to sell the block to their self-managed super fund, leasing it back to their farming partnership. They liked the idea of still being able to use the land in their business and leasing it back, forcing themselves to save for their retirement. |
Since they had owned the land from before September 1985, they thought no capital gains tax would be payable when they sold the land to the super fund. |
However, financial hardship through the drought resulted in them not making the lease and interest payments, thinking they could pay later. Unfortunately, by not paying rent and continuing to use the land now owned by the super fund, they are receiving financial assistance from it. The breach could result in a fine of up to $220,000 or imprisonment for up to five years. It could also result in them being banned from being trustees of a super fund and their fund losing its concession ally taxed status. |
The only way to avoid this would have been to keep paying the rent. |
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