SMSF investment in a private company or business

Self-managed super funds (SMSFs) are allowed to invest a private company or business provided the business is operated for the sole purpose of providing retirement benefits for fund members and it is allowed under the trust deed. SMSF trustees must take into account the sole purpose test when determining whether purchasing a private company or business is appropriate. The sole purpose test means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members or to their dependants if a member dies before retirement. Under the sole purpose test, the SMSF is eligible for concessional tax treatment. However, trustees who contravene the sole purpose test (i.e. provide a pre-retirement benefit to someone) could lose the fund’s concessional tax status and trustees could face severe civil and criminal penalties. When trustees are considering investing in..