Guarantees

If a guarantor of a borrowing by a super fund discharges the debt of the super fund, the discharge will be treated as a contribution to the fund.

If the guarantor has no right of indemnity from the super fund, the deemed contribution will occur when the payment to the lender is made.

If the guarantor has a right of indemnity from the super fund, the deemed contribution will occur once the guarantor has formally released the right of indemnity.

Comment:  Again, this view is very much influenced by economic considerations. Given this view of the ATO, supergearing transactions involving banks should either have no guarantees or, if guaranteed, be structured as an indirect loan to a related entity, which then on lends to the super fund.