subscribe to our newsletter
PIPA calls for alternatives to LRBA ban

PIPA calls for alternatives to LRBA ban

Miranda Brownlee
05 March 2015

Property Investment Professionals of Australia (PIPA) is urging the government to consider alternatives to an outright ban of borrowing in SMSFs including improved education and a ban on personal guarantees.

Speaking to SMSF Adviser, PIPA chair Ben Kingsley said he considers the risk of limited recourse borrowing arrangements (LRBAs) creating any mass problems for SMSFs to be remote and that issues around borrowing should be addressed in other ways first.

“Let’s start with educating SMSF trustees first by making sure they understand the risks associated with incorporating borrowing into their investment strategies,” said Mr Kingsley.

“Secondly let’s put some better regulation around the investments they are trying to borrow money on – for example if they are looking to borrow money to invest in direct property then let’s regulate advice on property investment.”

Mr Kingsley said the government should also be looking at some of the other mechanisms on the lending side that can be changed.

“I would be encouraging lenders to remove the personal guarantee obligation which will then remove risks for the super fund as it removes any further obligation of the trustees or the individuals who are providing those guarantees,” he said.

“Obviously the banks may need to address their pricing in terms of the interest they charge clients by removing that risk, but that would be another solution outside of just putting a ban on lending inside a super fund.”

Restricting SMSF trustees from using LRBAs, Mr Kingsley said, is giving consumers less opportunity to be able to invest for a self-funded retirement.

“The goal of super isn’t necessarily just a savings vehicle, it’s an investment vehicle to allow people to provide for a self-funded retirement to take the pressure off government to provide for people in their retirement,” he said.

PIPA calls for alternatives to LRBA ban
smsfadviser logo
join the discussion

Do your clients plan to add additional members to their SMSF if the new six member limit is passed as law?

SUBSCRIBE TO THE
SMSF ADVISER BULLETIN

Get the latest news and opinions delivered to your inbox each morning

In this month's issue:

  • Time wrap
  • The tech bull run
  • From hobby to passion
  • Golden Years
  • An untimely reminder
  • Why change is so difficult
  • Key Strategies for equalising super