Be careful of low interest rate loans to your SMSF

SMSF technical expert and columnist for The Australian newspaper
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Charging a low (or zero) interest rate on a super fund loan might lead to some high penalty rates in your super fund following a recent Private Binding Ruling released by the Australian Taxation Office.

The loans allowed in SMSFs are Limited Recourse Borrowing Arrangements or LRBAs. There are all sorts of rules governing these transactions and they’re quite easy to muck up. Good advice is essential when you set these structures up, when you’re running one and when you want to unwind them.

In August 2012 I wrote about your ability to personally loan money to your super fund as part of an LRBA at a very low interest rate. You can read that article here.

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