What can my SMSF invest in?
Posted by Northadvisory on September 9, 2016
The benefits of having a SMSF is you have the power to make the investment decisions. You have freedom to select investments that you think will benefit the SMSF members.
Investments must be made for the purpose of providing retirement benefits for the members of the fund. Members, relatives or associates of the trustees must not gain any immediate benefit from the fund’s assets or activities. So, for example, any property owned by the fund cannot be used by the members or their families, even if rented out at a market rental.
The most common types of investments founds in SMSF’s include;
• Cash management accounts.
• Term deposits. Managed funds (Australian and international).
• Listed Australian shares.
• Listed unit trusts (property, investment).
• Listed investment companies.
• Overseas listed shares.
• Residential property.
• Commercial property.
• Industrial property.
• Property purchased with borrowed funds (limited recourse borrowing).
• Property partnerships with non-related parties.
• Shares in private companies with non-related parties.
• Options, warrants, CFDs and other “exotic” investments – these assets are permissible with the proper investment strategy.
There are some investments that are strictly prohibited inside a SMSF. Your SMSF cant;
• Cannot lend money or provide any financial advantage to a member, a relative or associate of a member.
• Cannot borrow except in limited circumstances.
• Must limit investments in, or loans to, ‘related parties’ to 5% of the market value of the fund.
• Cannot buy assets from a member or a relative or associate of a member except for business real property. The exemption for off-market transfers of listed securities and widely held managed funds no longer applies. The new rules state that where a market exists, the purchases must be made on market.
If you’re unsure what your SMSF can and can’t do then please feel free to call;
SMSF Specialist Advisor
T: 02 9984 7774
Martin van der Saag
T: 02 9984 7774
Read more Superannuation articles.