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SMSF breaches continue
Many self-managed superannuation fund (SMSF) trustees appear to be slow learners if recent research produced by Partners Superannuation Services is any guide.
The research revealed that, as was the case more than a year ago, the most common breach being committed by SMSF trustees was exceeding the 5 per cent limit on in-house assets.
According to the Partners research, half of all fund breaches during 2008 related to exceeding the in-house assets rule.
Commenting on the result, Partners director Martin Murden said the problem with in-house assets stemmed in part from the fact that with investments such as shares falling in value, loans or investments expressed as a percentage of fund assets had increased.
"For example, if your fund previously had $100,000 worth of assets, a 5 per cent loan would be $5,000," he said. "However, should the value fall to $50,000, $5,000 would in effect translate to 10 per cent."
Murden said while people were often unaware of the 5 per cent restriction, others saw making loans from the fund as a cheap and easy source of business finance.
He said another key area of transgression involved making personal loans to fund members, with 25 per cent of SMSFs in breach of fund rules falling into this trap for amounts typically less than $10,000.
AUTHOR
Mike Taylor
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