New laws have been proposed to clarify the rules for super fund borrowing through 'instalment warrants', or limited recourse lending.
For super fund (including SMSF) borrowing made (or refinanced or varied) after the changes, the laws introduce:
This article has a quick look over the proposed new laws, which are currently before Parliament.Julian Smith
The proposed changes discussed in this article were implemented as proposed.You can read an article about the changes here.The article sets out:
The bill was introduced to Parliament on 26 May 2010. It will be examined by the Senate Economics Legislation Committee which is due to file a report by 15 June 2010.
The new rules will apply to super fund borrowing arrangements made from the day after the Bill receives Royal Assent — which is the last stage of the enactment process after both Houses of Parliament have passed the Bill.
However, the rules will apply to any existing arrangements if (after the bill receives Royal Assent) those arrangements:
The new rules clarify these issues:
The new rules add the following new restrictions:
For those of us waiting to see whether there is a radical policy shift in the area of borrowing by super funds, it is interesting that the changes really focus on:
But the Federal Government is not proposing a radical reworking of the rules. So:
The new rules are before the Parliament, and Parliament will consider making them law (provided that the Senate Committee provides its report by 15 June) when it sits from 15 June until 24 June 2010 - so hopefully the new rules will be finalised before the end of the financial year.
We will keep you posted.
For more information please contact Maddocks in Melbourne (03 9288 0555) and ask for a member of the Superannuation Team.
Arrange SMSF borrowing lending docs:
Download a checklist of the information you need to order a document package.
 The bill is the Superannuation Industry (Supervision) Amendment Bill 2010
Julian Smith is a partner in the Maddocks Commercial team.
Julian advises extensively in the following areas:
Julian advises clients ranging from public companies servicing the wholesale financial services market to high net worth individuals and their advisers.
Julian has been with Maddocks since undertaking articles in 2001.
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.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.