Comments by the then Assistant Treasurer Arthur Sinodinos seem to have put to an end to the long-expected review into SMSF Limited-Recourse Borrowing Arrangements (LRBAs). However there is still support for such a review in the submissions so far to the Financial System Inquiry.
The Cooper Review (Super System Review) made the following recommendation in regards to SMSF borrowing and LRBAs:
“Recommendation 8.10: The 2007 relaxation of the borrowing provisions and the consumer protection measures that have recently been announced should be reviewed by government in two years’ time to ensure that borrowing has not become, and does not look like becoming, a significant focus of superannuation funds.”
As the Cooper Review was released in 2010 this would have meant a review of LRBAs by 2012. It appears from the Review Paper that the thinking behind the above recommendation was that the changes to SMSF borrowing were “still recent”. The announcement by the government of the intention to make LRBAs Financial Products under the Corporations Act seems to have also influenced the Panels thoughts on the matter. However it is now over four years since that announcement and the proposed changes have not been implemented. The Panel did seem to be concerned about SMSFs borrowing, believing it to be “inconsistent with Australia’s retirement policy” and wanted to ensure that “borrowing does not become a significant focus of SMSFs”.
Read More »Will there be a review of SMSF Borrowing and LRBAs?