Borrowing for your Fund
With the exception of limited recourse borrowing arrangements (‘LRBAs’), trustees of a fund are generally prohibited from borrowing money. LRBAs enable trustees to borrow from a third-party or related-party lender to acquire property. The property acquired is held in a separate trust, which is set-up exclusively for this purpose. In the event of default, the rights of the lender are limited to the acquired property alone.
While LRBAs can assist trustees in diversifying their investments, and take advantage of concessional tax treatments, such arrangements can only be entered into if the fund’s governing rules permit it. Even if the governing rules permit such arrangements, borrowing alone can impact the fund’s ability to meet its obligations.
In addition, superannuation laws and compliance requirements can be hard to keep track of, whereas, any breaches in the law, can result in hefty fines.
We can help!
Since borrowing requires immaculate attention to detail, our SMSF Gearing Service Suite along with our expert lawyers, can provide you with the necessary advice and documentation to ensure compliance with relevant laws.
When using our Gearing services, you can select the services you need - as each service is priced separately, you can calculate the price of your gearing documentation, before you order.
Please contact our helpdesk at Townsends Business & Corporate Lawyers on (02) 8296 6222 or email firstname.lastname@example.org for pricing and assistance with ordering this handy documents package.