Certain investments are expressly restricted under the current legislation. These include investments from which members will receive a personal benefit such as acquiring assets for like a home for personal use by the member or loans to members for any personal purpose.

DIY Super Funds are also not allowed to borrow to invest.

An investment in derivatives is a strategy to reduce losses of underlying shares. This strategy can also limit the profit one can make in share trading. Due to low investment (margin) required to cover a large amount of underlying shares, derivatives usually are more volatile than direct shares.

Due to this volatility, it is possible to lose 100% of investment if the share market moves in the opposite direction to your trade. ATO in their various media releases have signalled to trustees of DIY Super Funds that investment in derivatives are allowed as long as they protect underlying shares, but not for speculative purposes.

A DIY may invest in Unit Trusts, however where that unit trust invests or loans money to the employer-sponsor or members or any related parties, the DIY Super Fund may get caught up with In House Asset rules.

Borrowings provisions only prohibit direct borrowings by DIY Super Funds, purchasing units in a unit trust which it-self borrows, would not; breach the borrowing provisions of SIS Act. However, trustees should be careful in investing in related trusts. Full explanation is outside the scope of this website.

Trustees intending to get involved in land development etc with the use of Geared Unit Trusts method are strongly recommended to contact us.

Hire purchase transactions do not breach the borrowing provisions. Therefore a DIY Super Fund may buy an asset under these arrangements. However, cannot enter into a lease with employer sponsor or members or any related party or will be caught up by In-house asset rules.