SMSF borrowing (related party)
(inc. GST) for an SMSF with a Cleardocs deed
(inc. GST) for an SMSF without a Cleardocs deed
Use Cleardocs to create your SMSF borrowing (or "limited recourse borrowing") documents. Cleardocs offers different packages depending on whether:
- the lender is a bank; or
- the lender is a related party of the SMSF's trustee(s) or is a third party (but not a bank).
Time taken to complete 10-15 minutes.
Cost $ 627.00 (inc GST) for an SMSF with a Cleardocs deed.
Cost $ 693.00 (inc GST) for an SMSF without a Cleardocs deed.
Printing Optional printing, binding and delivery for $ 55.00
Legal Sign-offThe master documents are written in plain language and are signed-off by our lawyers at Maddocks.
What documents are included in the related party limited recourse borrowing document package?
The Cleardocs limited recourse borrowing document package for when the lender is a related party includes:
- Declaration of Custody Trust (sometimes called a bare trust);
- Loan Agreement;
- If the interest rate under the loan can be varied, an Agreement to vary Interest Rate;
- If the asset being purchased is not land, an Equitable Share & Unit Charge;
- Compliance Letter;
- Trustee Minutes; and
- an Establishment Kit explaining what to do next.
What information do you need to order a limited recourse borrowing document package?
Download our checklist of information required to order a limited recourse borrowing document package for when the lender is a related party.
The fund does not require an underlying Cleardocs deed
To use a Cleardocs limited recourse borrowing document package, the SMSF does not require a Cleardocs deed. We strongly recommend that you update to the latest version of the Cleardocs deed — this is to make sure that the borrowing documents "match" the fund's deed.
You can update the SMSF's deed to a Cleardocs deed — or to the latest version of the Cleardocs deed — for $121.00.
If you do not want to update to the latest Cleardocs deed, you must seek legal advice about the suitability of the limited recourse borrowing arrangement for your circumstances to ensure that:
- your SMSF deed permits the trustee to:
- borrow money for the purpose of entering into a limited recourse borrowing arrangement;
- charge (that is, grant security over) the assets of the SMSF; and
- appoint a custodian to hold the acquirable asset; and
- the lender has reviewed and is happy with the borrowing provisions in your SMSF deed.
What the SMSF borrowing package does not include
The 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.
Overview of limited recourse borrowing arrangements
Our interactive graphic overview tells the story visually. It includes a diagram of how limited recourse borrowing arrangements work for SMSF borrowing
- the parties involved;
- the documents involved;
- the asset's journey to the SMSF Trustee(s); and
- each document's role.
This article analyses limited recourse borrowing arrangements for SMSF borrowing.
The Cleardocs information sheet provides a step-by-step guide to arranging your SMSF borrowing documents through Cleardocs.
Auto-populate answers using your existing BGL account
Integration with BGL Simple Fund 360 allows you to pre-populate your Cleardocs orders with existing BGL fund information. In order to pre-populate your answers, start a new order on the Cleardocs website and then click on "Use details from BGL Simple Fund 360" when the question interface gives you the option to auto-populate your answers.
The Cleardocs system then:
- directs you to the BGL website to log in with your credentials and authorise Cleardocs to access your fund information;
- returns you to the Cleardocs interface and prompts you to choose your preferred BGL document fund from a drop down box; and
- pre-populated the interface with your BGL fund information.
For privacy reasons, Cleardocs does not have access to any of your BGL login details. BGL only provides Cleardocs with certain contact information.
You will need legal advice
To use either document package, the fund must obtain legal advice. Legal advice is required for two primary reasons:
- The Limitations of this Pack As this Pack does not include the transaction documents described, 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 67A of the Superannuation Industry (Supervision) Amendment Act 2010 (Cth), the 'limited recourse borrowing 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, New South Wales or ACT, 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 SMSF limited recourse borrowing arrangements
Cleardocs has an extensive library of information on SMSF limited recourse borrowing arrangements - please search our ClearLaw and blog library.
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.
- Your 2nd, 3rd etc. orders of this document package for the same SMSF are:
- $110 each (inc. GST) for an SMSF with a Cleardocs deed; and
- $176 each (inc. GST) for an SMSF without a Cleardocs deed.
- Pre-population of Fund information from previous Cleardocs orders or your existing BGL account
- Allows for fixed or variable interest rate loan
- Extensive online help and local phone support
- Easy to use question interface