Leasing Assets From a Super Fund

The investment restrictions placed on super fund trustees include a capped percentage of assets that can be leased out to related parties. However, there is a distinction between asset classes. For business real estate, a lease can be arranged with a member, a relative of a member or with a related party. There is no upper limit on such an asset being leased.

With regard to residential real estate, motor vehicles and all other types of equipment, a super fund cannot lease such property to any member, a relative of a member or any related company or trust if the value of the asset in question represents 5% or more of total fund assets.

In summary, these restrictions are as follows:

Asset Class Restriction
Business property (such as an office, factory or shop) No restriction
Residential property Up to 5% of fund assets
Vehicles Up to 5% of fund assets
Computer equipment, office furniture Up to 5% of fund assets
Any other items Up to 5% of fund assets

As with any other dealings between a super fund and a related party, such leases must also involve proper, market-based conditions such as:

  • The interest rate built in to the lease must be comparable to that offered by finance companies and banks
  • Lease payments should be made monthly in advance
  • If it is a rental agreement, the rent should be comparable to other similar rental arrangements.

The calculation of the percentage of assets is carried out at the time the lease or rental commences and again each 30 June thereafter. The asset must be below 5% at both times.

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