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The Government has recently announced legislative changes designed to provide more certainty on self managed super fund borrowing arrangements.
Up until September 2007, superannuation funds were prohibited from borrowing. In September 2007 new legislation was enacted that provided a specific exception to the borrowing prohibition when the money borrowed is applied towards the acquisition of an asset, and the asset is held on trust for the fund until the loan has been repaid.
Finance can be obtained from banks and non-bank lenders. Banks will impose a premium interest rate because of the limited recourse nature of the loan. Borrowing from a related party is possible, but the terms and conditions of any investment must be at arm’s length (commercial).
Many self managed super funds prefer to make indirectly leveraged investments through a joint venture or unit trust.
If this topic is of interest to you and you would like to know more, please contact Marnie Dobson – phone: (03) 9252 0800 or email: mdobson@cfmc.com.au and she will arrange further information to be sent or a short consultation on this topic free of charge.
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