Update - Superannuation & Financial Services

In our December 2007 Super Update, we discussed the new rules which enable superannuation funds to borrow using a form of limited recourse borrowing.

On Thursday 21 February 2008, at a breakfast hosted by the Superannuation Club of the Taxation Institute of Australia, Stuart Forsyth, Assistant Commissioner of Taxation, confirmed the Australian Taxation Office’s view regarding a number of technical issues relating to the new borrowing rules.

We have now finalised our suite of standard form documents to facilitate the establishment of borrowing arrangements by self managed superannuation funds which meet the new requirements.

These documents include:

• a plain English deed, between the lender, the superannuation fund trustee and the custodian (which holds on trust the asset to be acquired by the superannuation fund); and
• Resolutions of the lender, superannuation fund trustee and the custodian regarding the borrowing arrangements.

The deed contains the terms of the borrowing and other required provisions, including provision for the establishment of the custodial trust regarding the asset to be acquired by the superannuation fund.

The Holding Redlich standard self managed superannuation fund trust deed contains broad Trustee powers which include power to borrow and to secure the repayment of money within the requirements of superannuation law. These provisions are contained in both the current and previous versions of the deed. Trust deeds prepared by other providers will need review and possibly updating to allow for borrowing under the new rules.

We would be happy to discuss the structuring of acquisitions under consideration by you or by your SMSF clients, and to assist with the preparation of documentation to implement borrowings. We can also assist with settling documentation provided by banks or other lenders, and with the provision of opinions as to whether such documents will put in place arrangements which fall within the new borrowing rules.

For more information please contact:

Heather Gray

Partner

(03) 9321 9909 This e-mail address is being protected from spambots. You need JavaScript enabled to view it