Lend Own Money to SMSF?

[SamA]

Can one lend personal funds to their SMSF with the SMSF repaying this loan in the future?

Background: where the smsf has a shortfall in paying say 20% deposit + costs on a residential property purchase (with smsf bank loan covering 80%) how can cash be loaned to smsf on a short term basis (say 12 months) until smsf is able to pay these funds back?

Super contributions can't be 'returned' so not an option.

Have come across SMSF related-party borrowing (e.g. http://www.cleardocs.com/products-instalment-warrant.html), however these assume borrowings are there to fund the purchase of an asset in the SMSF. In this situation this is the case, however there's also a 2nd bank loan in the equation.

 

[Terryw]

I beleive a member can lend money to the fund. However security over the SMSF assets cannot be taken.

You should also consider whether it is in the best interest of the fund for it to be sinking so much of its funds into one property.

 

[SamA]

we joined forum on exact same month... yet I don't have 1% of your posts

Any idea how one would proceed with such a borrowing arrangement? Still considered "limited recourse borrowing" with need to set up a bare trust etc?

 

[Terryw]

ATO ID 2010/162
Superannuation
Self managed Superannuation Fund: limited recourse borrowing arrangement - borrowing from a related party on terms favourable to the self managed superannuation fund
http://law.ato.gov.au/atolaw/view.h...able to the self managed superannuation fund;

Maybe of interest. (sorry couldn't link it properly). This concerns a SMSF borrowing from a related party at arms length.

Also
SMSFR 2009/2
Self Managed Superannuation Funds: the meaning of 'borrow money' or 'maintain an existing borrowing of money' for the purposes of section 67 of the Superannuation Industry (Supervision) Act 1993
http://law.ato.gov.au/atolaw/view.htm?locid='SFR/SMSFR20092/NAT/ATO'&PiT=99991231235958