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SMSF Updates

Can money owing to the SMSF be written off or foregone?

13 Feb, 2020

Recently we have an SMSF client who sold the artwork owned by the SMSF to a private buyer for $20,000. The buyer has not paid the costs in full so far.

The client has tried to recover the debt but the buyer has moved overseas and been reluctant to pay the remaining balance.

The question is if this debt can be written off?

SMSFs trustees are required to act in the best interest of the members. Therefore it is not in the best interest of members to forego the outstanding amount.  

Attempts should be made by negotiation or legal options to either: reclaim the asset and reimburse the amount paid or lent, and sell the asset to another buyer, or negotiate terms of settlement in the form of a sales contract which an arms length transaction would be including default clauses, interest on late payments etc.

In the absence of any sale contract, the ATO and auditor will question how is the transaction at arms length if not sold on same terms as any other purchaser.

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