Hi all
Would like to confirm accounting for limited recourse borrowings, and whether my understanding of how transactions occur practically is correct:
Based on the above, my understanding is we do not require a tax file number and ABN for the bare trust, with no tax returns to be lodged. Is my understanding correct?
Secondly, as personal guarantees from members are required for borrowing, I was reading that members should also document that even though they are personally guaranteeing the loan, they will have no recourse against the SMSF assets in an event the bank comes to members in case of a default. Did anyone here document this?
I am also thinking of minuting the fact that the the fund has decided to borrow funds.
Lastly, I am wondering if all directors of the SMSF trustee also need to be directors of the trustee for the bare trust?
Many thanks
Mona
Would like to confirm accounting for limited recourse borrowings, and whether my understanding of how transactions occur practically is correct:
- SMSF needs to pay for the property, so we do not need to get a bare trust bank account set up (i.e. we do not need to show a flow of funds through a bare trust);
- SMSF collects the rent and reports rent as assessable income, as it is the beneficial owner;
- SMSF makes loan repayments and payments for other holding expenses e.g. council, water rates, insurance etc, R&M;
Based on the above, my understanding is we do not require a tax file number and ABN for the bare trust, with no tax returns to be lodged. Is my understanding correct?
Secondly, as personal guarantees from members are required for borrowing, I was reading that members should also document that even though they are personally guaranteeing the loan, they will have no recourse against the SMSF assets in an event the bank comes to members in case of a default. Did anyone here document this?
I am also thinking of minuting the fact that the the fund has decided to borrow funds.
Lastly, I am wondering if all directors of the SMSF trustee also need to be directors of the trustee for the bare trust?
Many thanks
Mona