Paradise Lost - Holidays for super fund trustees may endanger the Fund

We’ve heard reports that some real estate spruikers are offering SMSF trustees holidays in Bali if they will seriously consider purchasing investment property from the spruiker’s company.

Trustees should be very careful before accepting such an offer.

In defining a self managed superannuation fund s.17A(1) of the Superannuation Industry Supervision Act 1993 (Cth) – ‘the SIS Act’ – says:

“… a superannuation fund is a self managed superannuation fund if and only if it satisfies the following conditions:

…

(f)  no trustee of the fund receives any remuneration from the fund or from any person for any duties or services performed by the trustee in relation to the fund”

Neither the SIS Act nor the Acts Interpretation Act 1901 (Cth) define “remuneration” but Blacks Legal Dictionary defines it to include “benefits … and non-cash incentives”.

A trustee who accepted a trip to Bali to investigate an investment opportunity that had nothing to do with Bali may well fall foul of this provision thereby making the fund non-compliant.