Other options than banning SMSF borrowing: Assistant Treasurer

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SMSF borrowing, LRBA, Assistant Treasurer Josh FrydenbergAssistant Treasurer Josh Frydenberg has told the SMSF Association national conference in Melbourne there are options available other than banning borrowing by SMSFs.

“We need to get the policy setting right and bear in mind a valid consideration that super is intended to generate a reliable and sustainable retirement income.”

“With an open mind, we will consult with all parties to ensure that we are in a position to make a fully informed decision that serves the best long-term interest of consumers and delivers a financial system which is as resilient as possible to economic and financial shocks.”

He suggested that rather than a complete ban on SMSF borrowing other options might be appropriate, such as banning personal guarantees.

Frydenberg said the future is bright for SMSFs, pointing to projections by Deloitte that SMSFs will hold $2.23 billion in assets by 2033.

“The number of SMSFs has grown by over 8 per cent per year since then to more than half a million SMSFs today.”

“The assets managed through an SMSF have grown exponentially – at around 20 per cent per year – and now exceed half a trillion dollars.”

He said that SMSFs are a “key source of competition” in the superannuation system, pushing others to improve their services.

The Assistant Treasurer seemed to support the recommendation of the Financial System Inquiry for a legislative objective for superannuation.

“My view is that a carefully drafted objective – with bipartisan support – would have positive benefits for the stability and accountability of the system and those who play a role in it.”

He also addressed the large amount of media attention on the cost of superannuation tax concessions recently.

“Firstly, let me emphasise that superannuation is, and should remain, the pre‑eminent savings vehicle for Australians.”

“We also need to remember that superannuation is not government money – it is the savings of Australians.”

Referring to the commitment by the Treasurer prior to the last election that there would be no unexpected adverse changes to superannuation, Frydenberg said “of course, superannuation tax concessions are a significant part of our tax system and will be considered in detail as part of the Tax White Paper process.”

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