Macquarie predicts FSI outcomes for SMSFs
A Macquarie Bank executive has offered insights into how he believes SMSFs will fare with the Financial System Inquiry, discussing SMSF borrowing and minimum balances.
Since the FSI asked for feedback on a potential ban on borrowing in super, several arguments have surfaced in support of LRBAs for SMSFs, including most recently from the SMSF Professionals’ Association of Australia, which stresses that LRBAs represent a relatively small proportion of total SMSF assets.
However, speaking at the Chartered Accountants Australia and New Zealand national SMSF conference in Sydney last week, Macquarie Bank executive director David Shirlow suggested changes to SMSF borrowing are on the cards following the Financial System Inquiry.
“[Inquiry chair David] Murray gives us a strong indication that the whole thing is on the table. When you get to borrowing in super [in the FSI’s interim report] the tone changes. It’s quite assertive. I think it’s quite clear that the Murray Inquiry could well recommend a complete ban on borrowing,” Mr Shirlow said.
“If the Murray Inquiry does take a firm line on borrowing, then the government could either adopt that firm line or, at the very least, I’d suggest we’re looking at some really significant constraints to address those sorts of concerns.”
Mr Shirlow also said the FSI’s suggestion of a compulsory minimum balance for SMSF establishment “doesn’t have legs”.
The regulators, including ASIC, have moved to ensure that licensed practitioners are disclosing the costs and cost-effectiveness of SMSFs to potential trustees, he said.
“I’d be surprised if the final recommendation was… a hard and fast minimum balance,” Mr Shirlow said.