ICAA pushing for borrowing review
The Institute of Chartered Accountants Australia (ICAA) will be pushing for a review of borrowing in superannuation in 2014 as per the Cooper Review’s recommendations.
The ICCA would like to see a review of the appropriateness of borrowing in superannuation funds, given the concerns from “significant” regulators and bodies, such as the Reserve Bank of Australia and ASIC.
“We need to make a decision – is it in or is it out? If it’s in, then we need to make sure we’ve got the right regulatory framework around it,” ICAA head of superannuation Liz Westover told SMSF Adviser.
“I think we just need to do a really strong analysis of it and we need to listen to what people are saying and work out whether or not in the long term… borrowing is the type of thing we want to see in superannuation,” she added.
Ms Westover said the ICAA views borrowing as “one of the last things” trustees should be considering when establishing an SMSF.
“You need to think about where your money is currently held, whether you’re looking at pulling that money out of an industry fund or a retail fund where it might have access to insurance [etc]. Those are the types of things you should be considering first, not your ability to borrow,” Ms Westover said.
The ICAA previously stated that addressing mounting concerns related to borrowing arrangements is “crucial” to the strength of the SMSF sector.
“In 2010, the Cooper Review found that borrowing was not consistent with Australia’s retirement income policy and a review was needed within two years,” Ms Westover said.
“This review is now overdue. The industry needs it to happen in order to identify what changes may need to be made to the current policy settings around borrowing within SMSFs.”