Are criticisms of SMSFs and LBRAs overblown?
New Australian Taxation Office (ATO) data suggests that borrowing within super is still not emerging as a major problem with respect to self-managed superannuation funds (SMSFs).
Despite the recommendation of the Financial System Inquiry to substantially ban borrowing within super and the claims of executives of some large Australian Prudential Regulation Authority (APRA) regulated funds that borrowing within super represents a problem for SMSFs, the tax office data has revealed only modest growth in the area.
The ATO data, released this week, estimates that SMSF assets held under Limited Recourse Borrowing Arrangements (LBRAs) equalled around $15.6 billion as at June this year and that LBRAs represented less than three per cent of total assets held by SMSFs.
The three per cent figure is consistent with estimates for the level of borrowing within super for SMSFs last year.
According to the ATO's quarterly SMSF statistical report, there are estimated to be more than 557,000 SMSFs with total assets of $590 billion.
It said both the number of funds and their combined assets had increased by roughly six per cent since June 2014.
Within the new report, the ATO revised the estimate of assets held by SMSFs under limited recourse borrowing arrangements (LRBAs) from $9.3 billion to $15.1 billion but said this could be attributed to some growth in the use of LRBAs by SMSFs and improved data collection.
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