Self Managed Super Funds can be tricky. To protect you and your super, the government places numerous restrictions on what you can do with your SMSF. Here are some mistakes we see some SMSF members fall into.
Life Insurance Ownership
When purchasing life insurance through super it is important that the owner is noted as the trustee of the super fund. If the owner of the policy is the individual this can lead to a breach of the SiS act.
Caution too when transferring existing policies into a newly established SMSF. It’s not simply a matter of changing the direct debit details. You must inform your insurer of your intention to pay if from your fund so they can adjust the policy details accordingly.
Ownership of Property Under Borrowing Agreements
Something that has been popping up recently has been the incorrect ownership details noted on property purchases. When purchasing a property, the custodian must be the registered owner, not the SMSF trustee. Whilst it is possible to correct, it can be expensive.
Bank Account Overdrawn
The bank account must remain cash positive at all times, if the account is overdrawn this is considered borrowing. Borrowing is not permitted unless under a structured bare trust borrowing arrangement.
Scott is a Senior Accountant at Insight Accounting advice. He has a Bachelor of Commerce and is a registered tax agent. Scott’s experience covers all facets of accounting but he specialises in small businesses and SMSFs.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.