Borrowing by superannuation funds

The Australian Financial Review has reported industry concern that a recent amendment to the Superannuation Industry (Supervision) Act 1993 (SIS Act) may have gone too far (story not available online). The change late last year introduced a new exception to the prohibition on borrowing by superannuation fund trustees.

The change is contained in section 67(4A) of the  SIS Act entitled  Exception - Instalment Warrants .

Section 71(8) was also inserted containing an exemption to the in-house asset rules for Section 67(4A) arrangements.

Section 67(4A) sets out the conditions for the exception to operate. But there is concern that the exception may permit unintended arrangements.

The amendment did not specifically grant an exemption from the Regulation 13.14 prohibition on a Super fund trustee giving a charge on fund assets.

UPDATE 12 April 2008: ATO Alert