SMSFs can carry on a business providing the business is allowed under the trust deed and operated for the sole purpose of providing retirement benefits for fund members.
Carrying on a business through an SMSF does have restrictions that other businesses do not have, such as entering into credit arrangements or having overdrafts. SMSF trustees that carry on a business through their fund must adhere to the sole purpose test.
The ATO looks for cases where:
The same regulatory provisions still apply to funds that carry on a business, i.e, SMSF investments must be made on a commercial ‘arm’s length’ basis, business activities must be conducted following the SMSF’s investment strategy, collectables and personal use assets cannot be displayed at the business premises and so on.
The SMSF cannot be involved in the following business activities: