New Super Gearing Legislation – Now in Place

This legislation applies from 7 July 2010 and introduces new sections 67A and 67B into the Superannuation Industry (Supervision) Act, 1993.  These new sections will apply to borrowing transactions by super funds entered into on or after 7 July 2010 (the date after the Amendment Act received Royal Assent).  The previous provision (section 67(4A)) applies to borrowing transactions which were entered into on or before 6 July 2010.

The main differences between the previous provisions and the new provisions are

• the new provisions are strictly limited to a “single acquirable asset” (or a collection of fungible assets which are treated under the new provisions as a single asset) unlike the previous provision;
• the new provisions permit the borrowed funds to be used to pay the transaction costs of acquiring an asset (eg stamp duty, conveyancing fees, brokerage and loan establishment fees) – this was not clear with the previous provision; and
• the new provisions permit refinancing of the borrowing  - this was not clear with the previous provision.
   
  Importantly the refinancing of the borrowing has been expressly extended to apply to borrowing transactions entered into under the previous provision.