There is a seemingly simple but key requirement in:
- setting up a SMSF installment warrant and
- borrowing to buy a super fund asset.
That is: you can only use the funds to buy a “single acquirable asset”. This little condition, which sounds normal, has always been a sticky issue. For example:
- if you buy a property, is stamp duty part of that acquirable asset?
- if part of your property burns down, can you borrow to fix the property?
- what if your fence is broken, can you borrow to repair it?
- if you property is over 2 land titles, can you still buy it?
Odd as it may seem, the interaction of this rule with these everyday situations means many could not borrow to pay for these items.
The ATO has now issued a ruling on the topic of SMSF borrowing to buy an asset and what a “single acquirable asset” means. They have examples on many of the common mistakes and misconceptions.
We are experts in self managed superannuation rules and can assist you in correctly setting yourself up for self managed super fund borrowing. Contact us today to discuss your plans.