ATO ID 2003/711: Retirement income entity - loan to a partnership
Date of decision: 28 May 2001
Business line: Superannuation

Issue
Has a contravention of section 65 of the Superannuation Industry (Supervision) Act 1993 (SIS Act) occurred when a self managed superannuation fund (SMSF) made a loan to a partnership?

Decision
Yes. A contravention of section 65 of the SIS Act has occurred when a SMSF made a loan to a partnership.

Facts
A SMSF made a loan to a partnership. The partners of the partnership are members of the SMSF.

Reasons for decision
Summary: Section 65 of the SIS Act prohibits a SMSF from lending money, or giving financial assistance, to a member of the fund or a relative of a member of the fund. A partnership does not have a separate legal identity; rather it is two or more persons carrying on a business in common. As the partners of the partnership were members of the SMSF the loan to the partnership was actually a loan to the members of the SMSF. Such a loan contravened section 65 of the SIS Act.

Legislative references: Superannuation Industry (Supervision) Act 1993 Section 65
Subject references: Regulated superannuation fund Loan Partnership