SMSF Loan Agreement

About Product

This is a special purpose loan agreement between a SMSF Lender and a Borrower which can include related Trusts and companies but not related individuals.

The Lender is a SMSF. Variable interest, fixed interest, capitalisation of interest, interest only and variable terms are core ingredients of the Loan Agreement.

► $129.00 (inc GST) - OR provided under your unlimited membership

► The master document has been signed off by Abbott & Mourly and is congruent with Australian law.

General Information

The LightYear Docs SMSF Loan Agreement can be used in circumstances where the SMSF seeks to loan monies to another party, including a related company or trust.

If it is a related trust or company, the Trustee and their adviser must ensure that the terms and conditions of the loan are the same or similar to what a commercial lending institution would lend to that party; and that it does not exceed 5% of the assets of the fund.

Benefits

Flexible duration – up to 99 years but ensure for related party loans (never individuals) that the term is the same as a bank.
Interest only or principal and interest.
Payments may be capitalised.
Fixed or variable interest rates.
Mortgage and personal guarantee deed available.
The loan agreement cannot be used as a related party loan for a SMSF LRBA.

Frequently Asked Legal Questions

Who can be the Borrower?

The LightYear Docs SMSF Loan Agreement enables the Lender and the Borrower to set the appropriate interest rate. However, the Loan terms and conditions should be arm’s length.

What is the interest rate?

The LightYear Docs SMSF Loan Agreement enables the Lender and the Borrower to set the appropriate interest rate. However, the Loan terms and conditions should be arm’s length.

What happens on the death of the Borrower?

If a Borrower dies, assuming that they are individuals, the deceased’s estate will take over the responsibilities of Lender or Borrower. It should be noted, that death is a termination event under the SMSF Lending Agreement.

Can the Loan Agreement be used for a SMSF LRBA?

The loan agreement cannot be used as a related party loan for a SMSF LRBA. Advisers should use The LightYear Docs RPA – Related Party LRBA meeting ATO guideline – PCG 2016/5 RRPL, which has the following ten documents compiled into one process:

A Product Disclosure Statement.
The Commissioner’s guideline PCG 2016/5 as a reference for compliance purposes.
Trustee minutes upgrading the deed and authorising the acquisition of a single acquirable asset under a Holding Trust.
SMSF Deed Upgrade plus minutes.
Investment Strategy covering asset and loan.
Holding Trust establishment plus minutes.
Related Party Loan.
Mortgage Deed.
Personal Guarantee (optional).
Lease if asset to be used for rental income (optional).

How long does this document take to assemble?

Depending on the complexity of the data, this document should take approximately 15-30 secs to assemble. If you experience timing outside of this please contact Support via the Surge app, alternatively please read this article for troubleshooting tips https://info.lightyeardocs.com.au/supportcentre/troubleshooting-longer-assembly-times-timeouts .

Is this document a legal document?

All master documents have been signed off by Abbott & Mourly lawyers. Tony Anamourlis of Abbott & Mourly advises that “at no time, due to inbuilt legal protection and security measures can a user change or amend a document on the LightYear Docs platform that has been signed off by a practicing solicitor. To do so would result in the user drafting a document of a legal nature and engaging in the provision of legal services. In addition, it would be a breach of copyright. In our opinion when completing the form fields through the LightYear Docs platform, users and their employees are merely carrying out an administrative task which is not the provision of legal advice.”

However in some complex areas such as the insertion of a varied range of client instructions into a Will or other such documents the user must be mindful of the extent to which a document is being drafted by the user rather than merely the administrative task of completing a form where the relevant fields are inserted into the reviewed and signed legal document provided by Abbott & Mourly.

The above advice is born out of numerous cases dating back to Re Sanderson, Ex parte Law Institute of Victoria [1927] VLR 394, 397 where the Court held:

“if a person does a thing usually done by a solicitor, and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor.”

Likewise in ACCC v Murray (2002) 121 FCR 428, 448 where Murray was building a franchise business that involved the legal writing and drafting of Wills from scratch based on the client’s personal circumstances. The Court held that this process was legal work.

Is the document easy to read?

All LightYear Docs products are written in plain English and assessed for readability. If at any time you come across any errors, please contact support@lightyeardocs.com.au.

What lawyers sign off on the LightYear Docs documents?

All LightYear documents are prepared and signed off by Abbott & Mourly from Melbourne, Sydney and Brisbane.

Are the LightYear Docs documents reviewed regularly?

All LightYear Docs documents form part of the LightYear Docs internal review process. We review all documents at least annually or when required to do so due to changes in legislation. Further details of this process and a review schedule is include on this website.

Can I get a sample of this document?

Yes, please email support@lightyeardocs.com.au to request a sample document for you to review.