National Australia Bank has created a product which it claims will help self-managed superannuation fund (SMSF) trustees to comply with new Australian Taxation Office (ATO) guidance with respect to limited recourse borrowing arrangements (LBRAs).
The bank has pointed to the product, NAB Super Lever, as providing the SMSF trustees with a commercial choice capable of helping them comply with the ATO guidance in circumstances where they have made borrowings on non-commercial terms.
The bank has pointed out that since the ATO published the Practical Compliance Guidelines (2016/5), attention had turned to SMSF trustees who had borrowed money from their own fund members in a non-commercial fashion.
“SMSF trustees now need to decide on adhering to the guidance through either amending, winding up, or refinancing in order to ensure that non-arm’s-length income [NALI] provisions won’t apply to their arrangement,” it said
NAB Equity Lending head, Adrian Hanley, said the NAB Super Lever represented a commercial choice for SMSF trustees who had used the borrowed fund to acquire shared or managed funds.
“For SMSF trustees who are impacted by the new guidelines, the Super Lever is a commercial LRBA which is designed for listed shares, ETFs and unlisted managed funds,” he said
“Refinancing into Super Lever will help to cut down administration for SMSF trustees who will now have a new obligation to follow a regime for non-bank LRBA.”
He said that, instead, trustee interest transactions, whether they were capitalised or paid monthly, were automatically managed and narrated in the Super Lever package.
Hanley said that to help SMSF trustees manage their financial obligations, the SMSF could also only contribute a portion of their total fund value into NAB Super Lever, something which ensured the total value of their fund isn’t held as security, which gives the trustee the necessary flexibility to use it for other purposes such as mandatory pension obligations.
