Self Managed Super Fund loans will not be banned but may face tougher regulation says assistant treasurer
Whilst speaking at the Tax Institute annual superannuation conference in Sydney on Friday 21 Aug 2015, Josh Frydenberg the assistant treasurer stated that the Government has no plans to ban SMSF loans, that is limited recourse borrowing arrangements (LRBAs) through SMSFs to purchase real estate according to Fairfax.David Murray’s Financial System Inquiry, released in December 2014, warned that SMSF borrowing for property increased speculative investment which could pose a risk to the financial system over time and called for a ban on LRBAs,
“I want to emphasise that we have been considering this recommendation very carefully but flag that we want to make sure the approach we take is proportionate to the risks that have been identified,” Frydenberg said.
“To put it in context only 0.07%, perhaps 6,500 properties, were held in an SMSF through a limited recourse borrowing arrangement in 2013.
“David Murray highlighted the risks associated with increased leverage in the financial system. Increased leverage always represents a risk and we recognise that. The government also recognises that most SMSFs do the right thing.”
When asked whether there were any plans for increased regulation of SMSF loans – instead of completely prohibiting it – Fairfax reports that the assistant treasurer said it was “under consideration”.
This appears to be good news for those taking control of their Superannuation through SMSFs. Though clearly not for everyone, borrowing to investing in property through your SMSF remains an option. It is suggested that you seek advice from a qualified professional before making any investment choices though your self managed super fund. If you are considering borrowing to invest in your SMSF we can provide you with Limited Recourse Borrowing Arrangements for your SMSF.
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