Operate Your Business Through Self Managed Superannuation

Have you ever considered to operate your business through the SMSF.

There are a considerable number of explanations why somebody may prefer to run a business their self managed superannuation.

Some typical, regularly inter-related, reasons are:

- The SMSF could be a useful source of seed capital to commercialize an idea or start a business;

- The super tax gives built benefits when the business is at last sold

- This fund could be the only source of capital available to expand or maintain a business.

Because the present super regulatory laws were first ordered over 17 years back, the super industry has had different views about if a self managed super can run a business. At first the response was mostly yes, running a business is without a doubt okay. In the late 1990s, it updated to no. The present response is, it depends.

This alteration in view is not since new rules have been introduced. As time passes our understanding and use of all laws change.

Recently the ATO released a document that exchanges ideas of a Self Managed Super Fund running a business. 

The ATO express that when they come over any Self Managed Superannuation running a business they at first look to see that the sole reason test hasn't been breached.

All super finances should fulfill this test to all times. As the test's name intimates it needs exclusivity of reason which the ATO expresses is much higher than a super finance being looked after for a prevailing or main reason.

The scenarios which the ATO could look closely at are:

- The super fund's trustee employs a family member;

- The trustee carries on a business which includes a movement normally completed as a distraction or distraction;

- The super fund's business exercises have links to associated exchanging entities, for example a business run by fund members;

- There are implications that super finance possessions are available for the private benefit and use of the trustee.

The ATO may in addition nearly analyze the following other important different areas of the law:

- A super fund trustee could not provide financial assistance or lend money to fund members or their relatives;

- Investment strategy - all super finances should have an investment strategy and the ATO could look for that the business actions and how they're directed should be as per the investment strategy;

- A super fund should not borrow money or maintain a borrowing - „case in point, drawing upon a lender overdraft lending account to fund the business activities“ would be a breach of this restrictions;

• A SMSF's trustee should not acquire a stake from a member or their relative or other related parties of the super fund – you should be careful that the super fund does not acquire equipment and plant from a member or their relative.

All SMSF investment dealings should be at a manageable distance or should be directed on a safe distance terms and conditions. For instance, employing a member or relative in the activities of the business at a salary higher than an arm’s length rate would be able to be a contradiction of the a safe distance provisions.

If you think this is too much information and that they could not follow, best suggestion is to consulate with an expert who could help you.