It is important to understand what is and what isn\u2019t an in-house asset to ensure compliance in an SMSF, a leading technical specialist has said.<\/p>\n
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Tim Miller, head of technical and education for Smarter SMSF, said on a recent webinar for SuperGuardian that understanding the concept of in-house assets will also allow trustees to determine when they can invest 100 per cent versus 5 per cent of the assets in a fund.<\/p>\n
\u201cWhen we look at the Tax Office statistics in regard to in-house assets, it\u2019s still the second-biggest breach by number of breaches performed in the SMSFs space, behind member loans, and there is clearly a link between loans and in-house assets,\u201d Miller said.<\/p>\n
\u201cIf you follow a few simple rules, ultimately you\u2019re going to find yourself in less trouble, but the main thing is that for a lot of people, where the in-house asset rules become a bit of an issue, is when they are trying to get their SMSF to invest in some form of related entity for varying ranges of purposes.<\/p>\n
\u201cAnd because the rules around that can become quite strict, people get in trouble either by not knowing who\u2019s a related party or by not knowing the rules around those related-party investments to make sure they get things right.\u201d<\/p>\n
Miller continued that while it is important to understand what constitutes an in-house asset, it is equally important to know what is not considered to be an in-house asset.<\/p>\n
\u201cThe definition itself is pretty straightforward, a loan to or an investment in a related party of the fund, an investment in a related trust or the fund, or an asset of the fund subject to a lease or lease arrangement between the trustee of the fund and a related party of the fund,\u201d he said.<\/p>\n
\u201cThat is a fairly simplistic definition of what an in-house asset is, and we then have to extrapolate from that to work out what certain terms within that definition mean.\u201d<\/p>\n
Miller said that by determining what is considered an in-house asset, you can then work through anything that may be excluded.<\/p>\n
\u201cThere are a couple of things that are on the exclusion list, including deposits with banks, life policies and pooled super funds,\u201d he said.<\/p>\n
\u201cAnd a lot of these issues are not necessarily significant from the broader in-house asset rule, but can be significant, particularly with things like life policies, when you\u2019re looking at acquiring assets.\u201d<\/p>\n
Some examples that could be significant are widely held unit trusts and property owned as tenants in common with a related party.<\/p>\n
\u201c[What we\u2019re saying] is a self-managed super fund is a related party can own property \u2013 it is an exception to the in-house asset rules, unless we then lease it to a related party,\u201d he said.<\/p>\n
\u201cSo, if we lease a property that it is owned by tenants in common to a related party, it\u2019s going to be an in-house asset.<\/p>\n
\u201cSo, if you have a residential property, it can\u2019t be leased to a related party, or more to the point, if it is leased to a related party, it\u2019s going to be an in-house asset, and it\u2019s more than likely that means it will breach the 5 per cent investment restriction on in-house assets.\u201d<\/p>\n
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Keeli Cambourne
\nOctober 27 2025
\nsmsfadviser.com<\/p>\n
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