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Murray inquiry calls for changes to SMSF borrowing

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Australian Broker | 08 Dec 2014, 08:14 AM Agree 0
The final report of David Murray’s Financial Systems Inquiry has advised the government to prohibit certain direct borrowing arrangements by superannuation funds
  • Vic Regional Broker | 08 Dec 2014, 09:05 AM Agree 0
    I fail to see how a loan restricted to 65% of a resi property or a commercial property on a limited recourse arrangements, could put the fund at the risk of a loss especially if the lender has an independent valuation. Yes look at some things like buying off the plan (must be an established property). The trouble is borrowing other than real estate is allowed, by all means stop that.
  • Rocket Scientist | 08 Dec 2014, 10:12 AM Agree 0
    Pretty sure Industry Super lobbyists have been in David Murray's ear!
  • marty | 08 Dec 2014, 10:55 AM Agree 0
    @Vic broker... It's the banks own fault. I have often thought the same as Murray. How can it be truly non recourse if there are personal and directors guarantees? Best outcome is possibly a 50% or 60% LVR maximum and no guarantees allowed, i.e. a true non recourse loan.
  • Robert Lopez | 09 Dec 2014, 03:48 PM Agree 0
    SMSF's as a rule should not borrow. Super is about savings not gearing. Bottom line the problem is the LVR. It should be set at say maximum 50%. Too many hocking up their funds to 80% plus.
  • Paul Sheedy | 09 Dec 2014, 05:02 PM Agree 0
    Superannuation is about investing your money on a long term basis unless you are about to retire. If retirement is imminent you should be in a conservative fund anyway. Hopefully we do not lose sight of what SMSF is about. If you invest your funds in shares, does that mean the company you are investing in cannot borrow? It is more about the right people owning an SMSF. I have been a lender for 25 years, who has the right to tell me I cannot borrow in my SMSF if I believe it is the correct investment path? Perhaps limiting the LVR to 70% for resi & 60% for commercial would get the required outcomes.
  • Qindows | 15 Dec 2014, 05:34 PM Agree 0
    I agree with Mr Lopez, SMSF's should not borrow at all. Whether it be for a residential or commercial property. The retirement incomes policy needs to ensure there is sufficient liquidity in the fund to make pension payments well into the future. Tell me when did you last see a an encumbered investment property pay out a sufficient income actually ease the cost of living and provide for an adequate retirement lifestyle.
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