Can your SMSF buy assets from you or your family? The related-party acquisition rules

If you run a self-managed super fund (SMSF), the temptation to move an asset you already own into the fund is common: shares in your own name, the workshop your family company owns, a block of land, a car or a boat. The general rule is that the fund can't acquire an asset from a related party at all. There are a few narrow exceptions, and getting it wrong can mean penalties, a non-complying fund and disqualification as a trustee. This article sets out the rule, the exceptions and the traps.

What is the rule?

Section 66(1) of the Superannuation Industry (Supervision) Act 1993 says a trustee or investment manager of a regulated super fund "must not intentionally acquire an asset from a related party of the fund" (SIS Act s 66(1), ATO Legal Database, https://www.ato.gov.au/law/view/document?docid=PAC/19930078/66). The ATO describes the practical effect: your SMSF generally must not acquire assets from members or related parties (ATO, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-investing/restrictions-on-smsf-investments/what-are-the-smsf-investment-restrictions). "Acquire an asset" does not include accepting money, so a cash contribution from a member is not caught.

Who counts as a related party?

Much wider than most trustees expect. The ATO says a related party of your SMSF includes all members of the fund, associates of members, and standard employer-sponsors and their associates. Associates of members include:

• each member's relatives — a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse, and a spouse of the member or of any of those people;
• each member's business partners, and any spouse or child of those business partners; and
• any company or trust that the member or their associates control or influence.

So your family company, a trust you control and your adult child are all related parties.

What are the exceptions?

Section 66(2) and (2A) allow certain acquisitions from related parties. The main ones for an SMSF are:

The ATO summarises the same position: an SMSF can't acquire an asset from a related party unless the price reflects the market value and the asset is a listed security, business real property, an in-house asset where the acquisition doesn't take in-house assets over 5% of total assets, or an asset that would be an in-house asset but is specifically excluded (ATO, retrieved 25 September 2026). The fund's in-house assets must not exceed 5% of the market value of its total assets; if they do at year end, the trustees must prepare a written plan to reduce them to 5% or below before the end of the following financial year (ATO). See our article on the 5% in-house asset rule. The in-house route works like this: an asset the fund acquires from a related party can be an in-house asset if it is acquired at market value and the fund's in-house assets stay within the 5% limit (s 66(2A)). Some assets are not in-house assets at all, so they don't count towards the 5%: under s 71(1) these include a life policy issued by a life insurance company, a deposit with an authorised deposit-taking institution, and an investment in a pooled superannuation trust made at arm's length (SIS Act s 71(1), https://www.ato.gov.au/law/view/document?docid=PAC/19930078/71). Note that s 66(2A)(a)(iii) allows a life insurance policy from a related party only if it is not acquired from a member or a relative of a member. FirstTech's flowchart also treats an asset that is a widely held trust (broadly, a unit trust such as a managed fund in which fewer than 20 entities don't hold 75% or more of the income or capital) as a separate branch of the acquisition test; we haven't confirmed the detail of that branch against the legislation, so check it with your adviser.

Listed security means a security listed for quotation on the official list of a licensed market, an approved stock exchange or an exempt market (SIS Act s 66(5)). The ATO says shares, units and bonds listed on an approved stock exchange qualify, but crypto assets and private company shares are not listed securities and can't be acquired from a related party (ATO). Our article on SMSF cryptocurrency compliance covers that side.

Business real property is real property (a freehold or leasehold interest, or a transferable interest in Crown land) that is used wholly and exclusively in one or more businesses, whether carried on by the related party or not (SIS Act s 66(5)). Real property used in a primary production business can still qualify if an area of no more than 2 hectares contains a dwelling used primarily for domestic or private purposes, provided that private use is not the predominant use (SIS Act s 66(6); ATO). The ATO's ruling explains that, for example, an owner of land that leases out commercial premises to a business will hold business real property provided the land is used wholly and exclusively in that business (SMSFR 2009/1, https://www.ato.gov.au/law/view/document?DocID=SFR/SMSFR20091/NAT/ATO/00001). Our article on business real property and the Age Pension covers the Centrelink side.

Note how the exception is worded: s 66(2)(b) applies to a fund "with no more than 6 members". For an SMSF that is not a practical restriction, because an SMSF can have at most 6 members (ATO, https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/before-you-start-an-smsf/compare-smsfs-with-other-super-funds), so a 1-, 4- or 6-member SMSF can all use it if the property meets the business real property definition. The wording matters for larger funds, which can't use this exception. The Act also allows acquisitions made under a merger between regulated funds and of kinds of asset the Regulator has determined by legislative instrument may be acquired (s 66(2)(c) and (d)); we don't cover those here.

What about shares or units in an unlisted company or trust?

Private company shares can't be bought from a related party under the listed-security exception. There is a separate question of whether a related company or trust investment is an in-house asset at all. Regulation 13.22C says an investment in a company or unit trust acquired after the in-house asset rules commenced is not an in-house asset if, when the asset is acquired: the fund has no more than 6 members; the company or trustee is not party to a lease with a related party (unless the lease relates to business real property); it has no outstanding borrowings; and its assets don't include an interest in another entity, a loan to another entity (other than a deposit with an authorised deposit-taking institution), an asset subject to a charge, or certain assets that were acquired from or held by a related party (SISR reg 13.22C, https://www.ato.gov.au/law/view/document?docid=REG/19940057/13.22C).

FirstTech's flowchart adds a warning: there is uncertainty about whether an SMSF may acquire shares or units in an unrelated company or trust from a related party even where that company or trust meets the reg 13.22C requirements, so trustees should get specialist legal advice or ATO guidance before proceeding (FirstTech, SMSF acquisition rules flowchart 2025-26).

Marriage and relationship breakdown

Section 66(2B) allows an SMSF to acquire an asset from another regulated fund where all of these apply: the asset is acquired for the benefit of a member from the trustee of the other fund; at the time the member and their spouse or former spouse are separated with no reasonable likelihood of cohabitation resuming; the acquisition occurs because of reasons directly connected with the breakdown of the relationship; and the asset represents the whole or part of the member's own interests in the transferring fund or the member's entitlements under Part VIIIB or VIIIC of the Family Law Act 1975 in relation to their spouse's or former spouse's interests (SIS Act s 66(2B)).

What happens if you get it wrong?

The ATO says that if you don't comply with the investment restrictions it may impose penalties, make the fund non-complying, disqualify you as a trustee or prosecute the trustees. If an asset isn't acquired at arm's length, all or part of the income from it may be non-arm's-length income taxed at the highest marginal rate (ATO); see our article on non-arm's-length income. The Act also prohibits schemes entered into to avoid the rule, and provides that contravening s 66 is an offence punishable by imprisonment for up to 1 year (SIS Act s 66(3) and (4)). The market value must be supportable; see the ATO's valuation guidelines and our article on SMSF annual asset valuation.

Worked examples

These are illustrative only and not personal advice.

Listed shares. Priya, a trustee, holds ASX-listed shares in her own name and wants them in her SMSF. Listed securities can be acquired from a related party, which includes a member, at market value (s 66(2)(a)), so an off-market transfer at the market price on the day is permissible, subject to the fund's trust deed, investment strategy and the sole purpose test. She should keep evidence of the market value. Note that in-specie contributions have their own contribution-cap and tax consequences; see our article on in-specie contributions.

Family company property. Dean's family company owns a warehouse it uses in its trading business, and Dean and his wife are the only two members of their SMSF. The warehouse may qualify as business real property if it is used wholly and exclusively in a business, so buying it at market value could fit s 66(2)(b) (a two-member SMSF is well inside the 6-member wording). The ATO's ruling SMSFR 2009/1 sets out the business use test in detail, and the trustees should confirm the property meets it before signing.

Private company shares. Marcus wants his SMSF to buy the shares in the private company he owns. Private company shares are not listed securities (ATO), so the listed-security exception is not available. Whether another route exists depends on the entity meeting reg 13.22C and on the FirstTech uncertainty above, so Marcus needs specialist legal advice before going ahead.

What to do

• Check whether the seller is a related party. Include your relatives and companies or trusts you control.
• Identify which exception applies before signing. If none does, don't proceed.
• Get a market valuation and keep the evidence.
• Check the 5% in-house limit after the transaction.
• Get advice on anything involving unlisted entities, a fund with more than six members or a relationship breakdown.

Sources

• ATO Legal Database — SIS Act section 66
• ATO Legal Database — SISR regulation 13.22C
• ATO — What are the SMSF investment restrictions?
• ATO — SMSFR 2009/1: business real property