SMSF

The test looks at how the fund is actually maintained, not just what the paperwork says. Even a genuineInvestmentcan breach it if the surrounding arrangement delivers a current benefit to a member or relative.

A company owned by a member, a family trust, or a member's spouse are all related parties, so transactions with them attract the restrictions.

It does not matter whether the intention is to pay the money back. The moment fund money is used for a present-day personal benefit without a condition of release, the access is illegal.

Paying a benefit without a valid condition is illegal early access, with the tax and penalty consequences that carries.

Every year an SMSF exists, it requires payment for an independent audit and the supervisory levy, and most funds also pay for administration, tax and accounting work.

The ATO states that an SMSF exists for the sole purpose of providing retirement benefits. Any decision to set one up is measured against that purpose rather than against a wish to access a particular investment for its own sake.

The regulator expects trustees to act with the care, skill and diligence of an ordinary prudent person, and to put the fund's sole purpose, providing retirement benefits, ahead of personal convenience.