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04 Nov 09 SMSF: purchase of a trauma insurance policy and the sole purpose test - SMSFD 2009/D1

This draft Self Managed Superannuation Funds Determination was released on 4 November 2009 for public comment by 4 December 2009. Its full title is "Self Managed Superannuation Funds: can a trustee of a self managed superannuation fund purchase a trauma insurance policy in respect of a member and still satisfy the sole purpose test in s 62 of the Superannuation Industry (Supervision) Act 1993?" The answer given is:

"Yes, a trustee can still satisfy the sole purpose test provided any benefits payable under the policy:

  • are required to be paid to a trustee of the self managed superannuation fund (SMSF);
  • are benefits that will become part of the assets of the SMSF at least until such time as the relevant member satisfies a condition of release; and
  • the acquisition of the policy is not made to secure some other benefit for another person such as a member or member's relative.

However, if a trustee purchases a trauma insurance policy that provides for benefits payable under the policy to be paid directly to someone other than a trustee of the SMSF (for example, the insured member or member's relative is the beneficiary of the policy) this would be inconsistent with the sole purpose test in section 62 of the Superannuation Industry (Supervision) Act 1993. In these circumstances the trustee would contravene section 62."

For a copy of SMSFD 2009/D1, go here

 


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