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What does the term ‘related party’ mean in relation to a Self-Managed Super Fund (SMSF)?

In the context of a Self-Managed Super Fund (SMSF), a “related party” encompasses a broad range of individuals and entities that have a close association with the members of the SMSF. The definition of a related party for an SMSF, as outlined by the Australian Taxation Office (ATO), includes:

  1. Members of the SMSF: Every individual who is a member of the Self-Managed Super Fund.
  2. Relatives of Members: This includes a wide array of family relations such as spouses, parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces, nephews, and the equivalent relations by marriage or de facto partnerships.
  3. Standard Employer-Sponsors: An employer who contributes to the SMSF for a member under an arrangement between the employer and the trustees of the fund.
  4. Partnerships: Where a member or a relative of a member is a partner.
  5. Trusts: Where a member or a relative of a member controls the trust.
  6. Companies: Where a member or a relative of a member has a significant influence over the company, typically through a substantial shareholding.

The rules around related parties in a Self-Managed Superfund (SMSF) are designed to safeguard the superannuation system.  Essentially, these rules make sure that SMSFs are always working to help members reach their retirement goals, keeping everything fair and above board.

Source – ATO