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Our bare trust for SMSF borrowing document is suitable for accounting, legal, and professional advisers who rely on highly effective legal documentation that is up to date with the latest in super legislative reforms and innovations.

Bare Trust for SMSF Borrowing | $363.00
Order your bare trust for SMSF borrowing deed online today and receive your documents electronically within 1 business day. Our deed has been carefully drafted by our legal partners to ensure compliance with relevant superannuation legislation. This document package is suitable for when the lender is a bank and can be used to facilitate borrowing for SMSF property and other asset purchases.
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From the Knowledge Base

Can superfunds borrow?

Although SMSF trustees traditionally were not allowed to borrow to invest in their SMSF, that changed in September 2007. The law was amended then to allow SMSF trustees to make certain investments in their SMSFs using borrowed money. The relevant borrowing arrangements are known as 'instalment warrant arrangements'.  SMSF trustees can now enter into an arrangement under which they have a right — but not an obligation — to acquire the legal ownership of an asset acquired with borrowed money.

An LRBA requires an SMSF trustee to take out a loan from a third party lender. The trustee then uses those funds to purchase a single asset (or collection of identical assets that have the same market value) to be held in a separate trust. Any investment returns earned from the asset go to the SMSF trustee.If the loan defaults, the lender's rights are limited to the asset held in the separate trust. This means there is no recourse to the other assets held in the SMSF.

What is limited recourse borrowing?

An LRBA requires an SMSF trustee to take out a loan from a third party lender. The trustee then uses those funds to purchase a single asset (or collection of identical assets that have the same market value) to be held in a separate trust. Any investment returns earned from the asset go to the SMSF trustee.If the loan defaults, the lender's rights are limited to the asset held in the separate trust. This means there is no recourse to the other assets held in the SMSF.

Is limited recourse borrowing right for your SMSF?

If you already have an SMSF and are thinking of using limited recourse borrowing to make an investment, you need to consider if this is the right kind of investment for your SMSF.

LRBAs are generally long-term investments. Consider whether your SMSF will be able to maintain the loan repayment and fees over that term. Will your SMSF have enough money left over to pay the other expenses of the fund such as accountant and auditor fees? Also consider what would happen if one of the members wants to leave the fund or retire and take their money out or start a pension?

Most importantly, we recommend that you seek advice from a qualified, licensed professional to help you decide if limited recourse borrowing is right for your SMSF.

Matters trustees should take into account?

Trustees should always consider the quality of the investment they are making and whether their fund can meet all future obligations under the arrangement. A trustee of an SMSF can only enter into such an arrangement where it is consistent with the investment strategy of the fund.

The governing rules of an SMSF must allow the trustee of the fund to borrow before any instalment warrant-type arrangement or any other LRBA can be entered into.

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