Can an SMSF trustee purchase a trauma insurance policy in respect of a member?
Many might think the answer is yes and that the ATO said so in SMSFD 2010/1.
However, yesterday the ATO prospectively withdrew SMSFD 2010/1 with effect from 1 July 2014. Accordingly, SMSFD 2010/1 is now in fact SMSFD 2010/1W (the ‘W’ of course indicating that the determination has been withdrawn).
This is a timely reminder that from 1 July SMSFs generally speaking can’t take out new trauma or own-occupation total and permanent disability policies in respect of members. (Old policies taken out before that time are grandfathered.)
For more information, see reg 4.07D of the Superannuation Industry (Supervision) Regulations 1994 (Cth), which applies from 1 July 2014.
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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.