A key concept that all Superannuation Fund Trustees should be aware of is the Arms Length Rules. Section 109 of the Superannuation Industry (Supervision) Act (SIS Act) requires that all investment transactions of a SMSF must be made and maintained on an arm’s length basis. This is to ensure prevention of transactions that may allow fund assets to be used as a source of concessionally taxed benefits to members in pre-retirement years, or to advantage non-members.

It is important to note that transactions need not necessarily be at arm’s length (i.e. they may be between related or associated parties) provided they are on a commercial basis.

Below is a short clip provided by the Australian Taxation Office intended to benefit Trustees of Self Managed Superannuation Funds to ensure compliance with the Arms Length Rules.

Should you require any additional information on the Arms Length Rules or wish to speak to one of our SMSF advisors don't hesitate to contact the team here at GMD Chartered Accountants and Advisors.