Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
eWombat Search
Hot Issues
Retiree self-protection: A volatility-and-downturn 'bucket'
How financial advice helps create wealth.
Superannuation gender gap narrowing, research shows
All the stats you need to see how Australia is going.
Market downturns, like this one, are to be expected
ATO claws back $850m in unpaid SG in FY 17-18
‘Hefty penalties’ with TRIS payment failures, SMSFs warned
The global financial crisis: Behind us but far from over
'Huge' professional risk in SG delays, big four firm warns
What a financial adviser can add to your portfolio's returns.
ATO updates crypto guidance
Reverse mortgages: Short-term gain, long-term pain
ATO set sights on 27,000 funds in ongoing crackdown
ATO zones in on hundreds of newly created reserves
A dynamic approach to retiree spending and drawdowns
Your investment freedom-maker
Living expenses for retirees on the rise
Still a long and bumpy road to travel on the way to a U.S.-China deal
Smart spouse investing
How financial advice helps create wealth.
What the ATO will be keeping an eye on in FY19
Examining the S in SMSF
Trade tensions to choke global growth: Moody’s
Tools for budgeting, cash flow, Super and more ….
Statistics show SMSFs not just for the rich
SMSFs lose thousands in property, investment scams
Articles archive
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Quarter 4 of 2015
Should we expect stormy skies or sunshine in 2016?
Merry Christmas and Happy New Year 2015
There's no one-size-fits-all retirement income
Market Update – 30th November 2015
Diversifying and cutting costs with ETFs
Why the ATO’s new powers make SMSF compliance more important than ever
'Unretiring' retirees
The detrimental impact of poor SMSF record-keeping
Counting the cost of 'grey' divorce
Combining total-return investing with realistic investment expectations
Market Update – 31st October 2015
Another telling reminder for SMSF trustees
Death in paradise – or your SMSF
Elderly exploited for assets
Intergenerational challenges for retirement saving
Death benefits – navigating the minefield
Strategy over structure
Market Update – 3oth September 2015
SMSF and limited resource borrowing – a warning
External partnerships and the in-house asset rules
Take a closer look at SMSF age demographics
Another telling reminder for SMSF trustees

Every so often, self-managed super cases before the Federal Court provide telling reminders for SMSF trustees about some of the most fundamental rules in superannuation.


The court gave its judgment during September in the latest of such cases. No doubt, a number of SMSF advisers will draw their clients' attention to the judge's findings.

The husband-and-wife trustees of an SMSF were personally fined $20,000 each in civil penalties for breaching the most basic rules in super.

Over a three-year period, the trustees arranged for their fund to make 68 "loans" and other payments totalling $209,677 to pay their personal expenses. These expenses included the servicing a line-of-credit debt remaining after the sale an unsuccessful business.

The "loans" were unsecured and no provision was made for the payment of interest.

As the judgment noted, the withdrawals "almost exhausted" the SMSF's assets. By June 2015, the fund had little more than $6,000 in assets.

It is worthwhile running briefly through the breaches in this case of basic superannuation law. The trustees contravened the:

  • Sole-purpose test: A super fund must be maintained for the purpose of providing retirement benefits to members.
  • Prohibition on loans to members: Super funds must not give financial assistance to members or their relatives.
  • In-house asset rules: With certain exceptions, SMSFs are not allowed make loans, provide leases or have investments with related parties and entities that exceed 5 per cent of its total asset value. (Significantly, there is no exemption under the in-house rule to the bar on providing financial assistance to members.)
  • Arm's length requirement: A fund is required to make investments on an arm's length, commercial basis.

SMSF trustees who breach such fundamental laws of super are not only risking hefty penalties but are putting their retirement savings in extreme jeopardy. In other words, they are often only hurting themselves.

By Robin Bowerman
Smart Investing 
Principal & Head of Retail, Vanguard Investments Australia
04 October 2015

Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning