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Restrictions Under Law

While the super laws don't tell you what you can and can't invest in, they do set out certain investment restrictions you need to comply with.

Make your investments on a commercial, 'arm's length' basis and don't buy assets from, or lend money to, fund members (or other related parties). Any time your SMSF makes an investment, it needs to be made and maintained on a strict commercial basis. This is referred to as an 'arm's length investment'. The purchase and sale price of fund assets should always reflect a true market value for the asset, and the income from assets held by your fund should always reflect a true market rate of return.
Unless an exception applies, trustees generally can't:

  • lend the fund's money or provide financial assistance to members and their relatives
  • acquire assets from related parties of the fund, including:
    • fund members and their associates
    • the fund's standard employer-sponsors and their associates
  • borrow money on the fund's behalf (certain limited recourse borrowing arrangements are allowed)
  • lend to, invest in or lease to a related party of the fund (including related trusts) more than 5% of the fund's total assets (these are called 'in-house assets').