A review of limited recourse borrowing arrangements remains warranted given the potentially “huge impact” the legislation could have on the sector, according to one of the joint accounting bodies.
Assistant Treasurer Arthur Sinodinos recently announced that the Coalition will not be conducting a review of LRBAs, as initially recommended in the 2010 Cooper Review.
However, a review of borrowing should still be considered to ensure trustees do not become “inadvertently unstuck”, the Institute of Chartered Accountants Australia’s head of superannuation Liz Westover told SMSF Adviser.
“We shouldn’t wait for there to be a problem to worry about it. We’ve got this opportunity here, with enough people having raised borrowing in superannuation as a potential issue, that we should be looking at it now to pre-empt any problems down the track,” Ms Westover said.
“The decision might be made that borrowing is appropriate and if it is then we can make an assessment of the regulatory framework around it to make sure… there’s no unintended consequences of the legislation,” she added.
“The last thing we need is for it to blow up and be an issue and then try and deal with it. Now’s the opportunity to pre-empt anything going wrong, make some decisions about the future of borrowing within super over the long term, and deal with it accordingly.”
Ms Westover said the ICAA will continue to raise the issue of a review into borrowing with Senator Sinodinos and other relevant stakeholders.
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