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Self Managed Superannuation Fund Borrowing — what's involved, and how to set up the legal documents
Two Cleardocs instalment warrant document packages: one for "bank lender", one for "related party lender"
Cleardocs enables you to create 2 different document packages for SMSF borrowing ("instalment warrant arrangements") — as allowed under Section 67(4A) of the Superannuation Industry (Supervision) Act 1993.
The 2 Cleardocs instalment warrant document packages are different depending on whether:
- the lender is a related party of the SMSF's trustee(s) or is some other third party (but not a bank); or
- the lender is a bank — after feedback from the banks, we tailor our SMSF borrowing documents to suit the legal
requirements of NAB, Westpac, and ANZ. As far as we know, our standard documents meet the requirements of all other
lenders, On our interface, we ask you which bank is the lender so we can tailor the documents if necessary. The rest
of this page describes each of these document packages.
The rest of this page describes each of these document packages.
Overview of instalment warrant arrangements
An article here analyses instalment warrant arrangements for SMSF borrowing.
The interactive graphic overview here tells the story visually.
There is considerable overlap between the graphic and the article. But the best place to start is the graphic which includes:
-
A diagram of How instalment warrant arrangements work for SMSF borrowing
- — the parties involved
- — the documents involved
- — the asset's journey to the SMSF Trustee(s)
- — each document's role
- The 2 alternate Cleardocs document packages: for a loan from a "bank lender", or a "non-bank lender"
- More information and next steps
|
Cleardocs deed required for Cleardocs instalment warrant document packages
To use a Cleardocs instalment warrant document package, the SMSF must have a Cleardocs deed which was created or updated
on or after 31 January 2008. However, since that time the deed has been modified to reflect feedback from the banks. The
latest version of our deed — which meets all the banks' requirements that we know about — was implemented on
4 May 2009.
So if the lender to your SMSF is a bank, then the process with the bank is likely to go more smoothly if the SMSF has a deed that
was created, or last updated, after 4 May 2009.
You can update the SMSF's to a Cleardocs deed — or to the latest version of the Cleardocs deed —
here for $99.
What the SMSF borrowing document packages include
| Bank lender package |
Related party lender package |
|
The instalment warrant document package for SMSF borrowing when the lender is a bank includes:
- Declaration of Custody Trust
- Compliance Letter
- Trustee Minutes
- Establishment Kit
|
The instalment warrant document package for SMSF borrowing when the lender is a related party includes:
- Declaration of Custody Trust
- Loan Agreement
- If the asset being purchased is not land, an Equitable Share & Unit Charge
- Compliance Letter
- Trustee Minutes
- Establishment Kit
|
All our SMSF borrowing documents are signed-off by our lawyers at Maddocks.
What the SMSF borrowing document packages do not include
| Bank lender package |
Related party lender package |
|
The instalment warrant document package for SMSF borrowing when the lender is a bank:
- does not include the loan documents that the bank will provide (that is, the loan agreement or the mortgage or charge); and
- does not include the transaction documents (for example: a transfer of land form or the relevant contract) for transferring the asset that the SMSF trustee(s) are using the loan money to buy.
|
The instalment warrant document package for SMSF borrowing when the lender is a related party does not include the transaction
documents for transferring the asset that the SMSF trustee(s) are using the loan money to
buy — those documents include, for example: a transfer of land form, the relevant contract, or
(if the asset being bought is land) a mortgage.
|
What information do you need to order an instalment warrant document package for SMSF borrowing?
You can download our checklist of the information required to order an installment warrant document package for SMSF borrowing
here.
You will need legal advice
To use either document package, the fund must obtain legal advice. Legal advice is required for two primary reasons:
What the pack does not include
-
The Limitations of this Pack As this Pack does not include the transaction documents described in the 'What the pack does not include' table above, you need legal advice to arrange those documents.
-
SMSF Compliance with Superannuation Law Although this Pack provides documents which will satisfy the requirements of Section 67(4A) of the SIS Act, the 'instalment warrant arrangement' must otherwise be in compliance with all the requirements of superannuation law. A lawyer can advise on these matters
If you do not have a lawyer then you are welcome to call the lawyers at Maddocks, who:
- if you are in Victoria or New South Wales, will give you a quote for the work; or
- if you are in another state or territory, will refer you to its affiliated firms.
More information about instalment warrant arrangements and SMSF borrowing
For more information about instalment warrant arrangements and SMSF borrowing, you can:
-
read an article — which has an interactive graphic overview —
about how Instalment Warrants work, the asset's journey to the trustees, the documents involved, and some of the emerging issues; and
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read our ClearLaw articles on SMSF borrowing, — see:
-
read our Blog posts, there are articles on SMSF borrowing and instalment warrants in July 2008 and September 2008, see here then click the relevant month in the right-hand column, then click on the relevant article
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view a video. Speakers include Julian Smith, Partner, Maddocks, Fiona Da Silva from St George Bank, and Cleardocs founder and Managing Director, Christopher Balmford
Questions or further information
If you have questions:
-
about how to use Cleardocs, contact the Cleardocs helpline on
1300 307 343.
-
about legal issues, contact the Cleardocs helpline on
1300 307 343. If you need advice, we will arrange for you to speak with a
lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents
Cleardocs provides. If you require other legal advice in relation to your particular
circumstances, then this will be charged for.
New user? Register & login for FREE
To set up on Cleardocs, all you need to do is key in your name, industry, email and password. Then you're ready to
create Cleardocs documents. It only takes a few minutes. (There's no joining fee. Just a pay
per use document fee.)
Existing users wanting to start a new document, log in
(top right)
The legal information and commentary on this site is general only. Documents ordered
through Cleardocs affect the user‘s legal rights and liabilities. To assess their
suitability for the user, legal, accounting and financial advice must be obtained.
