SMSF Loans – The Benefits Explained


One of the most common questions asked about SMSF loans is why I should take one? Given that there are many different ways to invest in your superannuation fund, some people think that taking out an SMSF loan doesn’t make sense and would rather invest through their superannuation fund directly. But there are many benefits to applying for an SMSF loan – it all depends on what you plan to use it for and whether or not an SMSF loan makes sense for you and your circumstances. Find out below some of the main benefits associated with applying for an SMSF loan!

Investment Choice

You probably won’t find a better way to get a loan than through your SMSF. Without an independent trustee to make these decisions, you can choose exactly what kind of investments you want to hold within your fund. So, if there are certain types of investment vehicles or property that you’re not allowed to invest in under normal circumstances, it is possible with an SMSF loan. You could also use a more significant portion of your SMSF funds on more speculative investments than might usually be allowed within a self-managed super fund.

Flexibility & Control

Unlike a regular loan, an SMSF loan allows you to choose which assets you will use as security for your loan. As your circumstances change, you can constantly adapt your strategy to ensure your super is kept separate from any other assets in your name. Your trustee also has complete control over how and when money from an SMSF is paid out. And if you’re looking for flexibility on repayment terms, most lenders will be willing to work with you so that payments are tailored to suit your situation.

Effective Tax Management

What SMSFs really provide for members is a way to manage taxation. Many different types of accounts can be held in a super fund, from term deposits to stocks and shares, and a member must have a full view of what they own to make intelligent investment decisions. SMSFs provide a comprehensive picture of your financial situation by pooling all these accounts together in one place. You get complete visibility over your investments to see precisely how your money is working for you. An essential part of running an effective tax plan is making sure that you don’t invest in anything that provides income at a high marginal rate.


When a trustee is responsible for a loan to a member, they must ensure that the money is used for its intended purpose. The goal is to prevent unnecessary debt and misuse of funds. The other significant benefit of borrowing from your super fund is having a fixed interest rate over its life. If you’re looking to use leverage to boost your returns, fixed rates could be beneficial as it helps shield you from rising interest rates while you’ve already agreed on what it will cost to borrow money over its life.

Low Fees

Interest charged on SMSF loans is subject to tax. It attracts concessional tax treatment, which means SMSF trustees don’t have to pay income tax or Medicare levy on any interest earned by SMSF borrowing money.

Protection From Creditors

SMSFs are much more secure than other forms of investments because creditors cannot access an SMSF’s assets to repay debt. Protection is precious in retirement, when assets may need to last for another 40 years or more.

Financial Security

An SMSF loan can be paid out of cash held in a Self-Managed Super Fund, which means you can make withdrawals from your fund without paying tax on earnings, provided that they are kept within your fund.

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