The Federal Government has got it right in retaining the limited recourse borrowing arrangements for SMSFs, Taxpayers Australia said. Survival of LRBAs a sensible outcome in government’s FSI response
The government’s recent detailed response to David Murray’s Financial System Inquiry thankfully saw sense, and ignored the report’s calls to ban limited recourse borrowing arrangements (LRBAs).
Although not a 100% endorsement (it had “anecdotal concerns” about some aspects of LRBAs and their use by SMSFs), the government considered there to be insufficient evidence to justify intervention in SMSF regulatory policy.
The government did say however that it will actively monitor leverage use within SMSF investments, and review the sector for borrowing risk outcomes over the next three years. It says it will commission the Council of Financial Regulators and the Tax Office to monitor the sector and report back to government.
“This is similar to a recommendation to come out of the Cooper Review in 2010,” says Taxpayers Australia’s CEO Moti Kshirsagar. “Active monitoring of the sector is to be encouraged at all times of course, and we support any such procedure.”
The government did however agree with the FSI’s recommendation to enshrine into existing legislation the objectives and purposes of the superannuation system. “The government will develop legislation to enshrine the objective within the superannuation law, where it will serve as a guide to policy-makers, regulators, industry and the community about superannuation’s fundamental purpose,” the response stated.
Kshirsagar says the positive response from the government is welcome, and that Taxpayers Australia looks forward to doing its part to ensure its membership is made fully cognisant of SMSF trustee responsibilities to make the system work to improve and sustain the SMSF sector.
“SMSFs have become central and very important players in the retirement savings future of the nation,” he says. “Taxpayers Australia is ready to continue its role in educating and informing its SMSF trustee members, and working to advocate for policy outcomes that are in their best interests.”
Note to editor: If you’d like more information about this topic or to schedule an interview with Taxpayers Australia’s CEO, Moti Kshirsagar, please Roseann Tanner on (03) 8851 4504 or email email@example.com.
Taxpayers Australia is a not-for-profit organisation committed to a fairer and more transparent taxation system for every Australian taxpayer. Its aim is to provide taxation practitioners, superannuation professionals, small businesses and individuals with up-to-date, informative and above all understandable information about taxation – to ensure that every Australian pays the right amount of tax and not a cent more.