I have a two part question.
First, am I correct in my understanding that a SMSF can make a loan to a company owned by members of the fund, as long as that loan is less than 5% of the fund’s assets at current market values?
Second, is the loan assessed against the value at the time the loan was made, or does it have to be reassessed periodically to ensure it doesn’t breach the 5% limit if the value of other assets fall?
Thank you.
A: Yes, you can loan money to a related company (but not to a sole proprietorship or partnership). Total In House Assets, including this loan, need to be under 5% of MV of super fund’s assets. It’s best to test this periodically, as breaches can be messy affairs and costly to fix.
Cheers,
Tony.
