subscribe to our newsletter

Loans to members remains top concern, says ATO

Katarina Taurian
12 September 2014 — 1 minute read

Despite the SMSF sector being largely compliant, the ATO said loans to members remains an ongoing concern and source of contraventions.

The ATO remains concerned that more than one fifth of SMSF contraventions involves loans to members, Stuart Forsyth, assistant deputy commissioner, superannuation, told delegates at the Chartered Accountants Australia and New Zealand National SMSF Conference in Sydney yesterday

“[Trustees] shouldn’t be making loans to members, I think I’ve said that every year for the last five years,” Mr Fosyth said.


“We understand the temptation; if [a trustee] can’t deal with that temptation, encourage clients not to have an SMSF. Nobody needs to have one, and not everyone should have one. Some people just can’t do it,” he said.

The comments parallel concerns Mr Forsyth expressed at last year’s conference in Melbourne.

“Related party dealings are almost invariably what gets us excited, [including] loans to members or transactions [trustees] shouldn’t have done,” Mr Forsyth said at the time.

“If you’re running a plain vanilla fund [and] you’re not making loans to members, you will have very little issue with the ATO.”

However, the ATO is satisfied that a vast majority of SMSFs are compliant and trustees invest their money safely and conservatively, Mr Forsyth said.

“This is a success story to celebrate,” he said.

He also noted that illegal early release is “under control” and that 90 per cent of the funds established between 2002 and 2012 are still running.

Compliance rates for the SMSF sector are improving in line with the educational materials available to trustees and professional advisers, he added.

In addition, Mr Forsyth noted that despite the corporate trustee being the structure typically recommended by practitioners, a majority of trustees are individuals.

He suggested that corporate trustees “make more sense” for SMSF members and that the industry may need to change its tactic to ensure that message gets through to trustees.

Loans to members remains top concern, says ATO
smsf logo
smsfadviser logo
join the discussion

Latest poll

Do you think the government will make significant changes to the taxation of super in the Budget this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.