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The Government recently introduced a Bill to amend the super fund borrowing rules by replacing the existing exception in section 67(4A) of the Superannuation Industry (Supervision) Act 1993 with sections 67A and 67B.
These new rules came into effect on 6 July 2010 and all new borrowings must comply with these new rules.
The new provisions are substantially the same as section 67(4A) but they clarify some aspects of the original provisions.
In our previous alert, "SMSFs - Borrowing - What have they changed?" on 1 June 2010 we outlined the major changes to the use of instalment warrant trusts.
In particular, the following issues have been clarified:
- Only one asset can be acquired in an 'instalment warrant trust' unless the assets are identical.
- The borrowed funds can be used to pay expenses in some cases.
- You still cannot borrow to fund construction costs.
- An existing loan can be refinanced.
- Guarantees from third parties are allowed provided they limit the guarantors' right of recourse to the asset.
For further information on instalment warrant trusts or superannuation, download our information brochure "Self-managed superannuation funds and borrowing" or contact a member of our team on 07 3231 2444.
Cooper Grace Ward was named Best Australian Law Firm in the BRW
Client Choice Awards 2010 - Revenue < $50m. Joint Best
Australian Law Firm in the BRW Client Choice Awards 2009 - Revenue
< $50m.
The firm has also been named as the fastest growing law firm in
Australia for 2009 by The Australian.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
