Robson Chartered Accountants Business & Finanical Advisors - Gosford - Central Coast - NSW

LIMITED RECOURSE BORROWING FOR SELF-MANAGED SUPER FUNDS (Also known as Instalment Warrants)

Amendments to the super law were made on the 24 September 2007 allowing self-managed super funds to borrow through limited recourse borrowing arrangements as before this date all borrowing was prohibited under former subsection 67 (4A) of the SISA.

The assets that are allowed to be purchased under limited recourse borrowings are any assets that a self-managed superannuation would generally be able to purchase such as property, unit trusts and shares. There are some specific rules on what assets can be held in a single limited recourse borrowing arrangement. The assets that are allowed to be held are as follows:

•  A single asset
•  A collection of assets that are identical, have the same market value as each other , and are treated as a single asset (that is, bought and sold together as a collection) – for example , a collection of shares of the same class in a single company.

Please note that when you buy property each title is treated as a separate arrangement and requires a separate recourse borrowing arrangement. This will also be the case if you choose to purchase a number of different blue chip shares on the same day, you will require a separate recourse borrowing arrangement for each different company share you purchase.

To allow the use of recourse borrowing in your self-managed super fund as a strategy you must be allowed to borrow per the governing rules of the fund and it must be a part of super funds investment strategy.