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SMSFs not irresponsible on borrowing
The SMSF Professionals' Association of Australia (SPAA) has sought to dismiss any suggestion that there has been exponential or irresponsible growth of borrowing within self-managed superannuation funds (SMSFs).
Commenting on recent data released by the Australian Taxation Office (ATO), SPAA technical and professional standards director Graeme Colley said that what had to be understood was that although SMSF borrowings increased from 1.1 per cent a year in 2008 to 3.7 per cent in 2012, this percentage still only amounted to 3.7 per cent of the total SMSF asset pool of more than $500 billion.
"This hardly suggests that trustees are borrowing without giving it due consideration," he said.
"SPAA's understanding of the current situation is that borrowing has not increased significantly since 2012 and remains a very small proportion of the total value of loans made by banks and other financial institutions," Colley said.
He said the lending criteria placed on superannuation funds that borrowed for limited recourse borrowing arrangements was more stringent than loans taken out by individuals for residential property and commercial property.
As well, Colley said that 90 per cent of borrowing took place in the accumulation phase rather than the pension phase.
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