An Administrative Appeals Tribunal decision this week should send a resounding warning to any trustees of self-managed super funds who are tempted to mix the finances of their business and their super fund in breach of superannuation law.

As reported in the Super and Financial Services News Alert, published online by Thomson Reuters, the tribunal upheld The Commissioner of Taxation's decision to include $87,000 in a fund member's taxable personal income.

The member had used the superannuation money to prop up the family's struggling real estate business. And the Commissioner had decided against exercising his discretion not to tax the amounts.

Thomson Reuters reports that while the tribunal expressed sympathy for the plight of the taxpayer, it emphasised that SMSFs should not be used as a "lender of last resort".

It is telling that the tribunal made this decision despite the money being returned to the SMSF.

Incidentally, the business did survive despite facing the prospect of voluntary administration at one point when its bank would not provide further credit.

The tax office, in its role as regulator of self-managed super, has expressed concern in the past about family businesses turning to their family SMSF for money during difficult trading periods.

Many of the funds that are annually declared by the ATO to be non-complying with superannuation law had mixed the members' personal and business finances with those of the fund.

After a fund becomes non-complying, the assets of the fund - less any undeducted contributions (after-tax or non-concessional contributions) - are taxed at the highest marginal rate. This means that, depending upon the circumstances, a non-complying fund could forfeit almost half of its assets in tax.

The ATO released a SMSF booklet a few years ago with the title ‘It's your money - but not yet'. That just about sums up the position.