SMSF How to start one?

I have money in an industry super fund. I would like to create an SMSF, borrow some extra money to buy a property.

What is the best way to start an SMSF for a dummy?

Thanks. :)
I did my through my accountant. They provided, essentially, a turnkey package that seemd quite cost effective.
They looked after all the ATO stuff, like ABN, TFN etc and the trust deed.
I then opened a bank account in the name of the fund.
Next step was rolling the employer super into the SMSF and having future empleyer contributions paid into the SMSF bank account.
I had free life and disability insurance with the employer fund, so had to take out cover for that, the cost of which is paid by the SMSF.
Once you get to that point, you can start looking at options per your plan.
However, I'd look at the LVR etc available for SMSF lending (plenty of threads on this on the forum) as you may not have enough cahs in the fund to make it worthwhile. Only you can decide that.
Good luck!
hi all
I will first state very openly that I have and do deal with a couple of groups that invest using smsf and also do develop using smsf
I do not set them up others do
but first Rob Williams
your way of doing it for me is the most dangerous and I will explain why
in a couple of ways
for you it may have worked out well but for people reading this post and doing that way is like running into a fire storm.
the trun key idea is great as long as the people setting it up know what they are doing alot of accountant don't.
if you have set up the smsf then you need to know what its aim alot of people set them up and run them like a mini super fund that they were in so buy shares or put it into cash with very little thoght of what the aim is.
the better one have an aim and then structure the investment for that aim.
doing smsf does require alot of knowledge of what you or your group want and then modeling it around that requirement.
looking around for option after setting the smsf is like going to a bathurst race in a gocart yes you can get around the track but you simply not in the race.
you need to work out what race what vehicle and what fuel you are going to use the same with investing.
now this is investing with a smsf
and there are hell of alot of vehicles the fuel is property shares even cash
and the race is what sector you are going to invest in
for me you need to do a couple of things
1 find a smsf accountant an investor using smsf is even better
2 look at warrants or banks that fund smsf and ask them if they know a good account that works in this area even here there area few.
3 map out what you want your smsf to do or invest in
4 look at are you going to do a turn key or a manage yourself( I like the turnkey version at 2k its cheap and they run it for you from a reg point of view)
5.make sure that yours complys so you can roll any other super into it
6. make sure that the people you go with are forward thinkers not reverse or stagnent.
this is the fast growing area and there are alot of deals out there.
this is just an opinion not any form of advice and don't take my above as a personal attack Rob Williams but I think you need to plan and get assistance in that planning before starting a smsf
as they can and do leverage more then a normal investment if done correctly
Thanks Grossreal. I hear what you're saying.
My fund was established for a specific outcome in a specific timeframe and planned accordingly.
I understood the question to relate to the simple mechanics of setting it up, so I described that process rather than the strategic planning that surrounds it, which took me many months to research, prepare and document.
Your points are valid and should be taken on board by anyone seeking to set up a SMSF.
hi Rob Williams
point taken
in answer to the question smsf for dummies
my answer to that is storm financial, hih, westpoint, bridgecorp, but to name a few
these were all investments for dummies
well they were dummies in hind site
and hind site is a wonderful thing.
the trouble for a smsf is that it designed not for today its designed for tomorrow and the day after and you don't want it to be run by dummies
its the old italian saying sausage in sausage out.
dummie in dummie out
for me its better to pay the best get the best invest the best.
my ideas above are not fool proof just for a smsf you do need to plan the most and part of that planning as in your case is understand what you want
Thanks Rob and GR for your responses.

I have 200k in super. The aim is to put most money into property, with some spare cash for bills and contingencies. Allocation could be Properties 80%, Shares 15%, Cash 5%.

It would work out like this:

(1) Property 160k (80%)
- Borrow 160k (50% LVR) to buy a 300k IP (20k for cost and reno)
- Income = Rent 15k (assuming 5% yield)
- Less Expenses = Interest cost 11k (7% IR), Management cost 6k (2%)
- Cash flow = 15k - 11k - 6k = -2k (Loss)

(2) Shares 30k (15%)
- Income = Dividend 1.5k (5% yield), Franking credit 0.7k
- Cash flow = 1.5k + 0.7k = 2.2k

(3) Cash 10k (5%)
- Income = Interest 0.3k (3% yield)

Yearly cashflow = -2k + 2.2k + 0.3k = 0.5k

If IP grows at 5% pa, then the portfolio return is 9% (on initial 200k).
If IP grows at 7% pa, then the portfolio return is 12% (on initial 200k).

Question: Is this a good arrangement? :confused:
Question: Is this a good arrangement?


IMHO it's not the best arrangement because your money is not working hard enough for you. (you are not gearing enough).

I'd only use enough funds to secure the property (28% deposit) and either use the remaining funds to secure 1 additional property or would invest it in something else.

For example, if you decided to buy a 2nd property, instead of having a $300K property increasing in value by $15K pa you could have 2x$300K properties and double your capital gains ($30K pa)

Ofcourse buying 2 IP's won't leave you much money to play with shares so you've got to decide what's best in your situation (you'll also have to comply with your SMSF investment strategy)

Edit: I'd probably go for 2 properties and then salary sacrifice 50% of my pay into super & then invest the new funds in shares, etc.

Hi all,

I have asked an accountant to set up an smsf that would allow me "To invest in anything" (from IP to ostrich & shares) and "To borrow from anyone" (this is for IP warrants).

My understanding is, the smsf will be in form of a trust with a trust deed that specifically allow the free choice of any investing and/or borrowing form.

The accountant said that was not the way it worked. What I needed was a bare trust. (BTW, he only does bare trust and nothing else).

1. What does it mean by a bare trust?

2. Would a bare trust do the job of IP warrants?

3. What kind of trustee do I need? (individual, company...)

4. How does the mechanic of an IP bought with warrants happen?
(eg. The property is put under a new trust between bank and smsf? etc.)

Thanks :)
Hi all,

I have asked an accountant to set up an smsf that would allow me "To invest in anything" (from IP to ostrich & shares) and "To borrow from anyone" (this is for IP warrants).

My understanding is, the smsf will be in form of a trust with a trust deed that specifically allow the free choice of any investing and/or borrowing form.

The accountant said that was not the way it worked. What I needed was a bare trust. (BTW, he only does bare trust and nothing else).

1. What does it mean by a bare trust?

2. Would a bare trust do the job of IP warrants?

3. What kind of trustee do I need? (individual, company...)

4. How does the mechanic of an IP bought with warrants happen?
(eg. The property is put under a new trust between bank and smsf? etc.)

Thanks :)

Hi Kenster

In answer to your questions;

1. A Bare Trust is a simple arrangement under which a trustee only conveys the trust's assets to the beneficiary (according to trust's provisions) and has no other duty under the trust. With regard to SMSF the bare trust holds the asset for the sole beneficial benefit of the SMSF and its member/s.
2. Most good document providers when preparing & establishing the bare trust also include the Instalment Warrant & Security Deeds that you will need.
3. Bare Trust trustee must be a company if you are going to borrow from a bank. The reason for this is that you can’t hold an asset in trust for yourself.
4. SMSF borrows money (say in this case from a bank) with the bare trust holding the ownership of the property until the loan is fully repaid. SMSF can then instruct bare trust trustee to transfer title back to SMSF.
Just make sure your deed doesn't put you into the CGT trap that many have.

The document in the link said when a warrant loan was paid in full and the Smsf claimed the title, this would trigger a capital gain event.

Assuming an IP is bought for 100k on 1/1/2008 using warrants. The loan is repaid in full on 1/1/2010 and the Smsf claims the title. New valuation is 200k.

How does the CG work out?

Thanks :)
This issue only arises for trust deeds that have been poorly drafted. According to Chris Batten there are quite a few around that have this problem.
Ok, I have been reading all these threads, and although now understand a little more re SMSF, I also now have a few questions.
we allready own a few IP in our own names, I want to start a SMSF so I can buy a couple of IP in the fund. The main reason for this is to avoid paying CGT when we sell them on hitting retirement age, or, if we don't sell and they are C+ I beleive we will not pay tax on the income.
Currently we have very little in our super funds, I could transfer over the money, but I would need to top this up substantially to have enough deposit for the IP's.
I have hundreds of thousands availble as redraw from equity in my exsisiting IP's, if I was to draw on this and deposit in to our SMSF,(to get my deposit) would the interest be tax deductable?
also, will I have to pay any tax when I transfer the money into the SMSF?
does anyone know any good accountant or SMSF specialist on the sunshine coast they could recomend? I dont want to end up with one of those ones where you get stuck paying CGT!
hope you can help

You can redraw/borrow enough money for the deposit and then onlend it to your SMSF.
Your SMSF will then be paying you market rate interest for that amount.
You'll need a lending agreement and there is an online doc you can buy or you can write your own.

You can borrow the remaining money from a bank.
You should do your sums though to see if it will work out because any negative gearing will only benefit your super fund and it will only be a 15% refund.

Also, the interest rate for SMSF loans is considerably higher (up to 1% with ST George)
SMSF can borrow to purchase Real Estate
“Instalment Warrants” Arrangement Demystified

(Disclaimer: This document is not a product disclosure statement – no person should rely on information in this guide. Trustees of Super Funds must take their your own legal, financial and accounting advice before they take any decision to borrow in their Self Managed Superannuation Fund This document is prepared by Manoj Abichandani SMSF Specialist Advisor and SMSF Specialist Auditor as per SIS Act as on 1st July 2009 -


SMSF can now purchase property with borrowed moneys; the process is simple. Our role in the whole process is to sell to the trustees and to their advisors, the legal documents required to put the borrowing structure in place as required by SISA.

This document is prepared in plain English and explains how borrowing works in a SMSF. A section is also included to warn trustees on the issues which they must watch out for when implementing instalment warrant strategy within their SMSF.

1) Can Super Funds borrow? – Yes, as long as the right structure is in place.

In September 2007 Sec 67 (4A) and other sections were inserted in SIS Act – to allow SMSF trustees to borrow and invest in certain assets, including purchase of real estate as long as the asset purchased is held in the right structure.

Features of this structure are as follows:

 Property Custodian Trust: The trust which holds the property is another trust (that is a trust other than the SMSF). This other trust holds the property as a custodian for the SMSF till the borrowing is paid off – this custodian trust is a bare trust where the beneficiary of the bare trust is the trustee of the super fund who is the absolute owner of the property and the trustee of the bare trust (property custodian trustee) simply holds the property in trust (as legal owner) for the trustee of the SMSF who acquires a beneficial interest in the underlying property held by this bare trustee.

 Right to transfer legal ownership: This new structure or exemption on borrowing for super funds is called “instalment warrants arrangement”. SMSF can reduce the loan by making payment of principal amount in instalments by income of the fund from this new asset and other income of the fund including any future contributions by members. Since the legal owner of this new asset is the trustee of the PCT – the trustee of the SMSF has the right to transfer the asset in its own name. This right (but not an obligation) to transfer the assets in its own name exists only once the borrowing is paid out.

 Purchase of a new asset: The SMSF is able to purchase any asset which the SMSF is permitted to hold directly.

 Non Recourse Loan: A non-recourse loan is where the lender has the right (or mortgage / security over) to recover any amounts owing over the asset - only from the asset purchased. The lender to the SMSF has no right over other assets of the SMSF. This limited recourse loan exposes the lenders, who normally insist on a higher LVR then a normal full recourse loan. Some banks insist that SMSF must contribute at least 30% of valuation of property plus purchasing costs such as stamp duty and legal fees before they can consider lending to the SMSF.

 Income & Expenses of the new property: All the income from the property is reported by the SMSF who also pays all the holding costs such strata, council rates and water rates and Interest for borrowing etc

 Once the loan is repaid, the purpose of the property custodian trust is over, the property can then be transferred to the trustee of the SMSF, if required, or the property can be left in the name of the trustee of the property custodian trust till it is ultimately sold to an outside party, hopefully when the SMSF moves to pension phase.

 The property can be sold at any time; the trustees of the SMSF can decide to sell the property at any time. Once the property is sold, the loan is first repaid to the lender and then any remaining amount is paid to the SMSF. The SMSF should report the sale in its income tax return and pay capital gain tax as per law.

2) Personal Guarantees

Despite high LVR (30% or higher) some banks insist that member of the SMSF must guarantee the loan personally. These personal guarantees defeat the purpose of the legislation and the ATO has disapproved them. Some advisors have suggested that members can then execute a document which will waive the right to recover any money’s from the SMSF, if they are called upon to pay under personal guarantee.

Another way around the personal guarantee is that, if there is enough equity in the members own home loan, they can borrow from a bank using their own home as security and then on-lend the money to their own SMSF. This type of lending is called an “internal lending”, where the lender is a related party.

3) What assets can be purchased by SMSF using borrowing strategy?

A SMSF can purchase any asset including shares and real estate as long as the fund satisfies superannuation law and the asset is a permitted asset under the SMSF trust deed and the funds investment strategy. Our documents are drafted for purchase of real property only.
The same in-house rules apply as prior to new legislation, such as; you cannot sell residential property to your SMSF and no associates can live in a residential property owned by the SMSF etc.

4) Who can lend to the SMSF?

Borrowing in SMSF can be from two sources

1. External Lender: like a bank or an any unrelated party, or
2. Internal Lender: like the member of the fund or a company or trust where the member of the SMSF is also an interested party.

If the SMSF borrows from an internal lender, member(s) of the SMSF are able to avoid high legal fees and higher interest charged by Lenders (banks) and save a lot of time in completing the transaction. However, the limitation of an internal lender is that members or related parties should have money to lend. This may mean, in some cases, related parties of the fund (e.g. members, trusts, companies etc), may have to mortgage their own assets (like their own home or investment properties) and borrow from third parties and then on-lend to the SMSF.

5) How borrowing can help?

Members can reduce their SMSF loan by making Concessional (deductible) contributions to their SMSF. When these contributions are received by the SMSF they are taxed at only @ 15% up to the concessional cap ( 2009 /10 year of $25,000 with transition rule for 50 year olds who can contribute only 50,000 up to financial year ended 2012) instead of members marginal tax rate.

The above amount may not be enough for a member to retire comfortably. What this means is that although there is no limit on how much you can have in super – there is a limit on how much you can put in super. By borrowing, a member can leverage its contributions and purchase a larger growth asset for a more comfortable retirement. Note that borrowing has its own risk and do not suit everyone personal situation.

6) SMSF borrowing Structure

Our Property Custodian Trust Documents include the following

1) Bare Trust Deed (property custodian trust deed)
2) Loan Agreement if lender is a related party
3) Loan application from – if lender is a related party
4) Minutes of the meeting to adapt instalment warrant arrangement
5) Updated Investment Strategy with implementation of borrowing strategy
6) Statutory declaration for apparent purchaser & beneficial purchaser to transfer the legal title of the property to the SMSF after the lender has been repaid without any stamp duty & CGT obligations.
7) Instruction sheet on what to do next.

7) Trustee of Property Custodian Trust (PCT)

The trustee of the PCT will legally own the asset – entity that holds the property in trust (property custodian trustee) for trustee of the SMSF.

In our solicitor’s opinion a new corporation should be created to act as trustee of the PCT and one or all members of the SMSF can be directors / shareholders of this corporation. Further trustee of the SMSF under our documentation must also be a corporation. Those SMSF who have individual trustees, who want to implement the borrowing strategy and use our documents must form a new (special purpose) company and change trustees from individuals to a company.

8) Other issues and SIS Act provisions relating to “Borrowing Structure”

 Sec 62 – Sole purpose test – the SMSF should be created for the retirement benefits of the members and for ancillary purposes like payment to dependants on death etc. Borrowing in SMSF should not be for present day benefits;

 Sec 52 (2) (f) – Investment Strategy – each investment should be consistent with the investment strategy of the SMSF. If the funds current strategy does not permit borrowing, the members must take financial advice if they are not capable to decide that borrowing risk will help their investment objectives;

 Sec 66 – The SMSF should not acquire an asset from a related party (some exemptions apply such as purchase of Business Real Property); Existing residential properties owned by SMSF member(s) cannot be sold to the property trustee. If commercial property is sold – Capital Gain Tax may apply to the member(s) and the SMSF may have to pay stamp duty on purchase (some states have different rules); Certain exceptions to these rules are contained in Sec 83 of SIS Act, however, if values of other assets fall and any in-house asset can cause the funds total in-house assets to exceed 5% of the market value of the funds assets, which must be rectified within the next 12 months;

 Sec 71 – In house asset rules – the SMSF should not lease or lend money or loan to an associated party; This means that restricted assets should not be leased to related parties such as residential properties can be leased to members or related parties;

 Sec 109 – SMSF should have arms length dealing with associated parties; means that if a lease is entered for a business real property with a related party - purchased by the SMSF via borrowing - the related party must pay market rent to the SMSF;

 The trust deed of an existing SMSF should be reviewed to ensure that borrowing and the investment by way of an instalment warrant is permitted under the governing rules;

 Since the legal owner of the property is the trustee of the property custodian trust, the trustee company has to be incorporated before contracts are exchanged with the vendor. Sometimes in eagerness, the trustees of the SMSF may exchange whilst the trustee of the PCT does not exist, in these instances, contracts may have to be rescinded and re-exchanged. It is possible that Vendor may charge a fee to re-exchange or disagree to re-exchange;

 Trustees should be aware that any deduction for interest is limited to 15% and if LVR is high – the transaction can result in negative cash flow in the fund, due to low rental return and high interest rates. This negative cash flow has to be funded by SMSF’s other income or new contributions by the member(s). If no new contributions are expected, the fund may not be able to make minimum interest payments. Further, if no deductible contributions are expected by the fund, borrowing by SMSF may not give a good overall tax result;

 In case of internal lender is a related company, the loan may be caught by Div 7A of the Income Tax Assessment Act 1936. In this case, loan agreement evidencing loan to SMSF need to comply with Div 7A of ITAA. Further, interest income in company is taxed @ 30% whereas the super fund receives only 15% deduction, hence, trustees have to be careful who they pick as the internal lender to the SMSF;

 Borrowing from a related party need to at commercial rates to ensure that the fund is maintained for Sole purpose test (Sec 62 & Sec 109 of SISA). Any extra than market rate will be treated as if the trustees want to make an early withdrawal from the fund and any less than the market rate will imply that trustees want to make contribution above the contribution cap’s to the fund.

9) Stamp Duty and CGT issues

Circumstances where Stamp Duty & CGT may be paid twice

The main concern in any instalment warrant arrangement is that if the documentation are not done correctly, the property custodian trust may be treated as a “separate trust” owning the property in it’s own right and not as trustee for the SMSF. If the PCT is treated as a “Separate Trust”, In this circumstance - when the loan is repaid and when the SMSF wants to transfer the property to the SMSF trustee (which is a separate trust), the SMSF may be liable for Stamp Duty and the Property Custodian trust may be liable for CGT – since PCT trust is “selling” the “property which it owns” to the trustee of the SMSF – one trust selling to another trust. Hence, it is very important that PCT should NOT be treated as a “Separate Trust”.

To avoid this double payment of stamp duty and payment of CGT, the property custodian trust deed and related documents should clearly establish that the property custodian trust is holding the asset “in trust for” trustee of the SMSF. This is achieved by establishing “real owner” status of the trustee of the SMSF in the Property custodian trust deed. And to justify to the borrowing exception under Sec 67 (4A) of SIS Act, whilst loan is in place, the asset is held “on trust” by the trustee of the property custodian trustee.

Beneficiary must be absolutely entitled to the asset to avoid paying CGT

Advisor should read further Sec 106-50 of the income tax Act 1997 regarding where the beneficiary is absolutely entitled to the asset as against a trustee of a trust.

In Taxation ruling 2004/ D25 the commissioner forms an opinion on circumstances in which a beneficiary of a trust is considered to be absolutely entitled to a CGT asset of the trust as against its trustee. An absolutely entitled beneficiary (rather than the trustee) is treated as the relevant taxpayer in respect of the asset for the purposes of the capital gains tax (CGT) provisions.

What the advisor needs to understand is that while the property is held in trust by the trustee of the property custodian trust and the borrowing is in place, the property should not be transferred to the trustee of the SMSF because and if it is transferred, the fund will contravene Section 67 (no borrowing allowed) of SIS Act and SIS Regulation 13.14 (no charge over assets allowed) and make the fund non-complying. Which basically means that fund will lose its tax concessions.

However, the documentation and the bare trust deed must not prohibit this transfer from the trustee of the property custodian trustee to the trustee of the SMSF at any time. If the deed prohibits this transfer “at any time” – then the beneficiary of the property custodian trust, namely the SMSF (or trustee of the SMSF) will not be “absolutely entitled” to a CGT asset of the property custodian trust and hence make the property custodian trust a separate trust. And if property custodian trust is determined as a “separate trust”, it will pay CGT when the property is transferred to the SMSF and the SMSF may pay stamp duty on the said transfer as explained above.

What is the cost base of the property?

Since the SMSF is the beneficial owner of the asset, the SMSF acquires the asset at the time of exchange of original contract. Any instalment payment to reduce the debt is a not purchase of asset, further any repayment of the last instalment of the loan is not the time of purchase of property. To clear any doubt, the SMSF acquires (beneficial interest) the property when the trustee of the property custodian trust exchanges with the vendor of the property.

The cost base of the property is the initial amount paid by the SMSF plus the principal sum borrowed by the SMSF to complete the sale and all related costs such as stamp duty and legal conveyance fees. Any instalment paid (repayment of loan) will not form a part of the cost base. Any interest paid or borrowing costs can be claimed as a tax deduction by the fund.

If the property is sold whilst the trustee of the property custodian trust is the legal owner – any capital gain derived will be reported by the SMSF (not by trustee of the property custodian trust) and pay the required CGT. If there is a loss on sale, the capital loss will be carried forward in the SMSF income tax return. After the sale, the property custodian trust has no use – it can be closed and the corporate trustee deregistered or used for another purpose (like trading activities – at that time the company can apply for a tax file number and open a bank account).

10) How the borrowing in SMSF process works?

1. Find target property and get the loan approved by a 3rd party Bank
2. Create SMSF with corporate trustee
3. Create Property custodian trust with Corporate Trustee
4. Roll over money from all existing Super Funds
5. Pay 10% deposit from the SMSF as exchange contracts with vendor
6. Limited recourse loan documents signed by SMSF Trustee with the lender (if lender is a related party – loan documents may have to be executed and instalment repayment conditions – interest rate has to be at market rate)
7. Lender will settle property from independent (can be related party in case of business property) party
8. The lender may insist on personal guarantee or may attach member’s home as supplementary security.
9. The property is tenanted – tenant can be a related party in case of business real property – the rent is paid to the SMSF (claims depreciation and other expenses) who is the beneficial owner. The SMSF declares rent as income and claims interest paid to the lender.
10. Tax returns are lodged by the SMSF

11) Warning: What you should be careful about on this new legislation?

 Those who want to enter into borrowing transaction should be aware that deduction for interest is limited to 15% and if LVR is higher – the transaction can result in negative cash flow due to low rental return and high interest rates. This negative cash flow has to be funded by SMSF’s other income or new contributions by the member. If future contributions are uncertain – lender has the right to forcibly sell the asset to recover its outstanding principal and interest. If interest rates rise or if the property is vacant for some reason – interest payments can be jeopardy. There are other borrowing risks which must also be considered.

 Any rent paid by the related entity (in case of business real property) has to be at market price.

 Capital gain may not eventuate at the time of selling the property as property values may not go up. Gearing can increase returns but also multiply losses,

 Existing SMSF member owned negatively geared residential properties cannot be sold to the property trustee. If commercial property is sold – Capital Gain Tax may apply to the member and the property trustee may have to pay stamp duty on purchase (some states have different rules – please check with your solicitor.

 Before selling own business property to the Property Trustee, any other charge over the asset may have to be retired before the property can be transferred. The only charge this property is allowed is by the instalment funding lender.

 Some of the Super Gearing schemes are being sold by promoters at a high entry cost or by builders to sell their properties at an inflated price or by banks or other lenders at a higher interest rate than the normal standard variable interest rate,

 Property Trustee could be subject to land tax each year,

 If the fund is reaching pension phase – paying a pension to the member is important to meet pension conditions to ensure that the fund remains a compliant fund; in a negative cash flow situation the ability of the fund to pay a pension could be impaired.

 The trustees must remember that merits of the property being purchased is the only consideration to purchase property within SMSF – not for the fact that it is now possible to purchase property with borrowing within SMSF. Asset is important – not how you fund it.

 Buying your own office / factory or your retirement home at today’s prices within SMSF is coming out to be the major strategy in the current climate, if trustees have other reasons, they must be evaluated very carefully

12) Internal Lender arrangement

Internal Lender
Variation 1 to the above arrangement
Members borrow on own property and then on lends to the SMSF

This arrangement is very similar to the one discussed above – however in this variation the member (or related entities) mortgage their own assets with a full recourse loan to the lender and on-lend to the SMSF on a limited recourse loan.

For the member whatever interest is collected from the SMSF can be paid to the Lender. A benefit of this arrangement is that as far as the outside lender is concerned – the borrowing structure is an internal structure of the member - as the lender holds security over assets which are not owned by the SMSF.

A point to note in this arrangement is that the loan from the member to the SMSF will depend on the equity on own property(s) but the member can lend up to 100% of the purchase price of the property as long as there is enough equity in assets outside the SMSF.

Manoj Abichandani
SMSF Specialist Advisor
SMSF Specialist Auditor
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