The FBAA has applauded the Turnbull Government’s decision to reject a a recommendation from the Murray Financial Systems Inquiry on SMSF
In its response to the final FSI report, the Treasury stated it did not agree with the FSI’s recommendation to prohibit limited recourse borrowing arrangements (LRBA
) by SMSF
s. This was the only one of 44 recommendations not to gain acceptance.
, the chief executive of the FBAA has welcomed the government’s decision to reject this recommendation, saying there is little evidence of abuse of LBRAs.
“In reality, the level of activity with borrowing has been small in the overall context of total assets inside the SMSF
and broader superannuation sectors,” White said.
According to the Self-Managed Superannuation Funds: A Statistical Overview 2012-13 report, released by the ATO in December, assets held under LRBA
s increased to $8.3 billion, or 1.68% of total SMSF
assets in 2013, up from $497 million or 0.15% of total SMSF
assets in 2009.
However, despite the value of LRBA
investments increasing, the report also revealed that only 2.7% of SMSF
s reported assets held under this type of agreement.
But as the broking industry continues to see a rise in SMSF
lending for property, White says brokers need to be wary of the dangers of unscrupulous real estate spruikers posing as financial advisers.
“As brokers we see this as a worsening problem as more and more real estate groups are pushing people into SMSF
’s to gear up and purchase property,” he said.
“I have said it before but it bears repeating. The property spruikers create the problem in the SMSF
lending space and that is where ASIC needs to focus. The FBAA would like to see a change so that SMSF
holders cannot allocate a property to their fund which is less than two years old.”
“That would ensure the spruiker and the ‘middle man’ are not financially involved.”