The SIS (Superannuation Industry Supervision) Act 1993 once prohibited a Self Managed Superannuation Fund (‘Super Fund’) from borrowing money to purchase assets.
Amendments to the SIS Act were introduced to allow Super Fund’s to invest in any kind of asset and to borrow, charging those assets so long as there is no recourse for the borrowing against the Super Fund.
Section’s 67A & 67B of the SIS Act permit a Super Fund to borrow money if:
The most common asset purchased is either residential or commercial property, however the Super Fund can also acquire other types of assets such as ASX listed shares, company shares, Bitcoin etc.
The Super Fund can borrow from a commercial lender, or even from a member of the Super Fund.
We specialise in
Ever since the Superannuation Industry (Supervision) Act 1993 (SIS Act) was amended, LRBA Structures has been establishing the Bare Trust Deed documentation that accompanies Limited Recourse Borrowing Arrangements.
In order for a Super Fund to purchase an investment property and borrow money, it will be necessary to have a special legal structure in place.
The Bare Trust Deed is a key component within the legal structure and extreme care is required so to ensure there are no adverse GST, taxation or stamp duty consequences.
It is estimated that 25 to 35% of legal structures fail to satisfy the lenders requirements, which quite often leads to delayed settlements and penalty interest being applied, this is as a result of the deed rules not containing specific wording/clauses that is unique to each and every lender.
You will have comfort in knowing that our deeds have adopted significant changes over the years to not only ensure SIS Act and regulatory compliance, but to also accommodate the individual requirements of the lenders.
We guarantee that our deeds will pass legal vetting by any lender, however in the rare instance that a particular lenders requirements change without notice, we will make the necessary amendments speedily, and free of charge.
We can assist with structuring the required legal structure which may include a new Super Fund or updating the governing rules of an existing fund, a new trustee company etc.
AS FEATURED IN
As featured in your investment property magazine, specialist Vic Bulfone gives a broad insight and a sweeping overview into various aspects of purchasing property through your Super Fund.
Topics covered in this article are:
✓ The cost and benefits
✓ Setting up the Super Fund/Legal Structure/Investment restrictions
✓ Borrowing money