It appears increasingly likely that the Government will not adopt the recommendation of the Financial System Inquiry to ban most forms of direct leverage by superannuation funds, including SMSF Limited Recourse Borrowing Arrangements (LRBAs).
SMSF borrowings which contravene the SIS Act and regulations are on the ATO’s radar. ATO Assistant Commissioner for superannuation, Matthew Bambrick, told the Tax Institute Annual Superannuation Intensive Conference that the ATO is “concerned that some organisations are promoting arrangements where SMSF assets provide members with a current-day benefit.”
Assistant 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 …
Other options than banning SMSF borrowing: Assistant Treasurer Read More »
In order to remove uncertainty surrounding low, or zero, interest rate LRBAs and the non-arm’s length income rules the Government should create a safe harbour provision. It is unclear where the idea for 0% interest rate LRBA started, through the June 2012 meeting of the superannuation technical National Tax Liason Group was likely a key point. In …
Safe harbour provision for low interest rate SMSF LRBAs Read More »
The FPA have recommended an independent institution be established to “assess whether the superannuation system is meeting its objectives.” This recommendation is made in the FPA’s second submission to the Financial System Inquiry, and comes in response to concerns about the lack of direction in superannuation policy, including short-termism. “The role of superannuation as a …
Policy needed to fight short-termism in superannuation: FPA Read More »
The Association of Financial Advisers (AFA) have recommended that before SMSFs are allowed to borrow they be forced to seek financial advice. “It is our suggestion that SMSF’s should need to obtain advice from an appropriately licensed financial adviser before they can enter into a limited recourse borrowing arrangement within the fund.” This recommendation was …
Force SMSFs to get financial advice before borrowing: AFA Read More »
CPA Australia has called for a lifetime limit on superannuation lump sums, among other recommendations in a second-round submission to the Financial System Inquiry. Limit superannuation lump sums CPA said in the submission that people need to be encouraged to take income streams in retirement instead of lump sums. However CPA does not argue for prohibiting …
CPA calls for lifetime limit on superannuation lump sums Read More »
Changes to how the ATO reports statistics for SMSF Limited Recourse Borrowing Arrangements has resulted in a dramatic increase in the 2013/14 figures. However this really reflects a underlying trend, instead of a actual spike in LRBAs. These statistics are contained in the ATO Self-managed super fund statistical report – June 2014, which includes details of the June …
Spike in LRBAs a result of ATO change to statistics Read More »
Rice Warner has argued that several limits should be placed on SMSF borrowing, which will have the effect of reducing the amount that SMSFs could borrow. This is one of the recommendations included in the second submission by Rice Warner to the Financial System Inquiry (FSI). Limits on SMSF borrowing Rice Warner draws a distinction between installment warrants, which have …
Place limits on SMSF borrowing, says Rice Warner Read More »
Cavendish, the SMSF administrator, has argued for a number of changes to LRBAs rather than a ban on SMSF borrowing, in a submission to the Financial System Inquiry. SMSF borrowing Cavendish draws a distinction between “traditional style” borrowings and the limited recourse borrowing arrangements (LRBAs) of SMSFs. “These differences mean the level of systemic risk …
SMSF LRBAs should be a financial product, says Cavendish Read More »