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The federal government is under pressure to stop tinkering with borrowing in superannuation, as many investors and pre-retirees fear the popular structure will be taken off the table.
Through what is referred to as a limited recourse borrowing arrangement (LRBA), Australians are allowed to borrow money in their self-managed superannuation fund (SMSF) to invest in property. This has been the case since 2007, when the Liberal government eased restrictions on leveraging in a superannuation environment.
However, since then, the federal government has been tinkering with the allowances of LRBAs, and is about to put another host of changes through Parliament. These latest changes will mean that an amount borrowed by a superannuation member will count towards their total superannuation balance, which could effectively push that fund into paying more tax.
Accounting and advisory giant Deloitte said this week that the government should simply commit to a position rather than consistently altering the rules.
Persistent changes are impacting confidence in the superannuation system and compromising property and superannuation investment strategies in the long run.
“It has been pushed back and pushed back. So the government never really had a good look at them and whether they are appropriate in the system,” Liz Westover, partner at Deloitte, said.
“My view is that they need to decide whether they’re in or they’re out, and if they’re in, then let’s get some proper legislation around them and put the rules in place that actually make them practical for people to use,” she said.