SMSF to buy car space

Yes - we did get expert advice and it has all been approved by both the auditor and the ATO.

We are not drawing on the SMSF as beneficiaries - and we are not drawing a wage from the P/L because, asides from some general crisis maintenance stuff, we don't manage the accommodation business.

It is run by an outside manager to ensure everything is kept everything at arms length. Grounds maintenance is done by an external contractor. Linen and cleaning are done by external contractors. If we wanted to do something like the grounds maintenance, to cut costs, we would have to draw a wage and prove to the ATO that the wage is equivalent (not a penny more, not a penny less) to what a contractor would be paid ... so better to just keep everything at arms length.

The "arms length" rule was hammered into us by the accountant from the start and a great litmus test - fortunately the business throws off enough $$ to do this, and still have enough left over for a 20%+ roi to the SMSF.

 

True - but it would've been easier to refinance for us. In the end, not required.

The point is that loans have to be at arms length ... whether that is thru realms of paperwork and bank accounts to satisfy the ATO - or via a third party.