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Tony W.
Tony W.
Appin, NSW
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Q:

Can I use funds in my SMSF to invest in a business and are there any limits in terms of how much I can invest?

2 weeks ago

Responses

Hi Tony,
I’ll leave it to the accountants on here to give you the formal answer but what I understand is no, you can’t invest in a business through your SMSF.
You could purchase a commercial premises in your SMSF provided that met with your documented investment strategy
Cheers

Scott

Wellll, actually you CAN invest in a business......you just cant get paid from that business......

its complicated and boring as batshit until someone gets spanked by the ATO for doing the wrong thing.....but this is the laymans version:

A super fund has to have the sole purpose of providing for the members retirements. That means that if it invests into a business, and the business pays a member or associate of the member, then the member is seen as deriving a benefit (zzzzzzzzzz) without satisfying a condition of release (I told you it was boring), so the fund is deemed non-complying (yawn!!!) and gets to pay 47% tax on its earnings (WHAAAAA?????) and also 47% on its ASSETS!!! (WTF???!??!??!??!)

I told you its boring until something bad happens........

I have seen funds that genuinely operate a business on an arms length basis and are as clean as a whistle as far as sole purpose test goes......but they get an ATO audit every 2 or 3 years which really sucks the jam out of their donut, if you know what I mean.

The moral of the story is....just because something is technically feasible, doesnt mean you should do it.....keep your SMSF for passive investments, even if that passive investment is the business premises from which you run your business.

cheers
bc

Hi Tony,
As I thought, better to let Brendan advise you. As Brendan says, just because you “could” doesn’t mean you should
Best of luck
Cheers

Scott

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