Make compliant SMSF investments
The flexibility is real, and so is the line you cannot cross.You have found something you want the fund to invest in, and it is not on any platform’s menu. That is the whole point of running your own fund. It is also where the rules begin to apply at once: the sole purpose test, the in-house asset limit, arm’s length terms, related party prohibitions. They apply to your specific facts rather than in the abstract. The fund’s entire advantage is its tax status, and a single investment can put that at risk. We look at the transaction you are proposing and tell you whether it can be done, and how.
An answer on your facts
Not a general warning about compliance, but whether this investment is allowed and what it would take.
A no while it's cheap
Finding out before the fund commits costs a fraction of unwinding the investment afterwards.
A record that answers later
The resolutions and the strategy explain the decision to an auditor years after everyone involved has forgotten it.
What rules apply to what your fund can invest in?
Every superannuation fund has to invest in line with its own written investment strategy and within the superannuation law. Four rules do most of the work. The sole purpose test requires the fund to be maintained to provide retirement benefits, not to give anybody a benefit today. The in-house asset rule caps loans to, investments in and leases with related parties at five per cent of the fund’s value.
The arm’s length rules require every investment to be made and kept on commercial terms. And the related party prohibitions stop the fund acquiring assets from its own members at all, save for a short list of exceptions. An SMSF has far more investment freedom than a public fund, and all of that freedom sits inside those four boundaries.
What is the sole purpose test?
It requires your fund to be maintained for the purpose of providing retirement benefits, and nothing else. An investment that delivers a benefit to a member or their family today can fail it. A property let to a relative below market rent is the common example, however well the fund performs financially.
Can my fund buy a property from a related party?
Generally no. The fund cannot acquire assets from members or their relatives, with a short list of exceptions: business real property, listed securities and certain managed funds. Whether your property fits the business real property exception is the question worth answering first.
What are in-house assets?
Loans to, investments in and leases with related parties of the fund. They cannot exceed five per cent of the fund’s total value. If they do, the trustee has to bring the fund back under the limit, which usually means selling something.
Does the fund need a written investment strategy?
Yes, and it has to address risk, return, liquidity, diversification and the fund’s ability to pay benefits when they fall due. It also has to be reviewed regularly rather than written once. Investing without a current strategy is a breach in itself, separately from whatever the investment turns out to be.
Not sure the investment is allowed?
Tell us what the fund wants to do and who else is involved. We will tell you whether it is permitted, and how it would have to be structured.
One investment can cost the fund its tax status
You have a specific investment in mind. A property, a loan to your own business, shares in a private company, something with a related party somewhere in it. You need to know three things. Whether the fund can do it at all. Whether it can be built so that it complies. And what has to be documented to prove it later. Nobody will give you those answers in the abstract, because they depend entirely on your facts.
- We will tell you whether the proposed investment is permitted.
- We will apply the sole purpose test, the in-house asset rules and the related party restrictions to your facts.
- We will tell you how the investment has to be structured to comply.
- We will prepare the trustee resolutions and transaction documentation.
- We will review and update the fund's investment strategy.
- We will identify an existing investment that is at risk and advise on rectifying it.
The opportunity is not on anyone's menu
Your fund has cash to deploy and you have found something worth deploying it into. Your business needs capital and you are wondering whether the fund can lend to it. There is a property held by a related entity that would suit the fund well. You have been invited into a private company alongside people you are connected to. Each of these sits in territory where the superannuation rules are specific and unforgiving. Getting it wrong is expensive as a trustee and awkward as a person, because the other party is usually somebody you know.
What's included in your SMSF investment advice service
- Assessment of the proposed investment against the superannuation rules.
- Sole purpose test analysis on your facts.
- In-house asset calculation and advice.
- Related party transaction advice.
- Investment strategy review and update.
- Trustee resolutions and transaction documentation.
What happens when an investment does not comply?
A non-compliant investment rarely announces itself. It sits in the fund for years looking ordinary, and surfaces when an auditor asks a question nobody had asked before. That the loan to the family company is an in-house asset and always was. That the unit the member’s daughter rents at mates’ rates fails the sole purpose test. That the shares were acquired from a related party and could not be.
The ATO’s SMSF programme targets exactly these, because that is where the money is. The penalties are the smaller problem. A direction to rectify usually means selling something at whatever it is worth that quarter. At the far end sits non-complying status, where the fund’s entire asset base is taxed at the top marginal rate in a single year. A trustee who acted in good faith and did not ask has no special defence, because the obligation was theirs the whole time.
How we make the investment work
We take the transaction you are actually proposing and run it against each rule that bites on it, before the fund commits to anything. Where the answer is no, you get that answer quickly and cheaply, which is worth as much as a yes. Where it is yes, we tell you what has to change: the structure, the terms, who holds what, and what the fund’s strategy needs to say.
We then prepare the trustee resolutions and the transaction documents and update the investment strategy. The record is what an auditor sees years later, not the reasoning behind it. If you already hold something you are uneasy about, we would far rather find it now, while rectification is still your choice.
How we assess an investment
Three steps from a proposal to an investment the fund can defend.Run the rules
We run the proposed investment against the sole purpose test, the in-house asset limit, the arm's length rules and the fund's own strategy.
Find the structure
Where it can be done, we tell you what has to change for it to comply, and where it cannot, we tell you that first.
Build the record
We prepare the trustee resolutions and transaction documents and update the investment strategy so the decision stands up later.
A clear answer on the investment in front of you
SMSF trustees are usually capable investors who know precisely what they want to do. The frustration is not the decision. It is being handed general compliance warnings when the question you asked was whether this particular thing is allowed.
So we answer that question. We apply the rules to your facts and tell you yes, no, or yes if you change these three things. Superannuation compliance is tax law at its core, and our Chartered Tax Advisor has held that Tax Institute credential for twenty-five years.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Get an answer before the fund commits
Tell us what the fund wants to invest in and who else is involved. We will tell you whether it is permitted, how it would have to be structured, and what has to be documented.
More on this area of law
Read more about SMSF investment rules and what your fund is allowed to hold.
Solution Brief: Why you need an enduring attorney for your SMSF
Solution Brief: Why you need an enduring attorney for your SMSF
The trustee of your SMSF is all-powerful. The trustee decides how much money you can put in the fund, who else can join, how your money
Solution Brief: Super Death Benefit Nominations
Solution Brief: Super Death Benefit Nominations
This information sheet discusses why you need to think about what happens to your super when you die People have more and more of their wealth
Solution Brief: Self-Managed Superannuation Fund Investment Rules
Solution Brief: Self-Managed Superannuation Fund Investment Rules
Budget Update Notice: The 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are
Solution Brief: Powers of attorney for SMSF members and trustees
Solution Brief: Powers of attorney for SMSF members and trustees
This Solution Brief discusses what you can do to safeguard your super benefits if you lose capacity as a member and trustee of an SMSF Planning
Solution Brief: Individual or Company Trustee? (SMSFs)
Solution Brief: Individual or Company Trustee? (SMSFs)
We often get asked whether it is better to have a ‘company trustee’ or ‘individual trustees’ for a self-managed super fund. This question gets asked both
Solution Brief: Why you need to update your SMSF Deed
Solution Brief: Why you need to update your SMSF Deed
The Government just can’t help itself but tinker with super. Our courts then need to interpret what it all really means, so we know exactly what
Solution Brief: Self-Managed Super Funds – Individual or Company Trustee?
Solution Brief: Self-Managed Super Funds – Individual or Company Trustee?
We often get asked whether it is better to have a ‘company trustee’ or ‘individual trustees’ for a self-managed super fund. This question gets asked both