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I had a question regarding lending to SMSF. I have a fully set up SMSF investing in a property. Since the loan through the bank to property in SMSF is over 6.5%, I have borrowed a loan under my personal equity at 3.5% and would like to lend that to SMSF in order to save high interest rates.
Can I do that and if the answer is yes, what do I need to do get started on that and do you guys provides that service. If you do provide that service, how much do you charge.
A: Graeme Colley, from Super Concepts, has provided the following answer:
“It is possible for an individual to obtain a loan personally and then on-lend the amount to the SMSF as a related party borrowing for purposes of a limited recourse borrowing. It obviously needs to meet the requirements of a limited recourse borrowing.
Where the superannuation fund has obtained a related party borrowing and the limited recourse borrowing arrangement is over property, it must meet the requirements of the ATO’s safe-harbour guidelines. These require certain conditions to be met and are published in PCG 2016/5 which is available from the ATO website.
Here is a link to a Q&A document published by the ATO:
