Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
eWombat Search
Hot Issues
Federal Budget 2019 - Overview
How the 2019 Federal Budget affects you
The problem with getting to 53 years of age.
Paying for health care in retirement
Personal super contributions and the 10% test
What investors can expect as key moves affecting markets await
ATO flags PAYG obligations for SMSFs with legacy pensions
Don't just plan for retirement; Plan for your life
Consumers misunderstand types of advice
Budget Time - How's Australia going?
When super isn't compulsory
Investors brace for Brexit - deal or no deal
ATO identifies SMSF contravention red flags
Extra website resources and tools is one way we offer you and your family more.
Tax and estate planning traps flagged with pension restructures
A checklist for a healthy financial year
High-risk LRBAs, TBAR on the ATO’s radar this year
All you need to know about how Australia is going.
Royal Commission report makes super fee recommendations
Four tips for boosting your super balance
New Year resolutions, New Year strategies
Part 4 - The major benefit of ‘behavioural coaching'
3 tips for weathering the market's bumpy ride
Common BDBN ‘pitfalls’ flagged in wake of ASIC action
Case law points to ‘growing importance’ of SMSF document chain
How Australia is performing.
Global outlook summary: Down but not out
Australia - a comprehensive run-down of our vital statistics.
Your guide to smarter holiday reading
Articles archive
Quarter 1 January - March 2019
Quarter 4 October - December 2018
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