Questions Abound When SMSFs Borrow

If an SMSF wants to make use of the new provisions that allow an SMSF to borrow to acquire an asset, that asset must be held by a trustee on behalf of the SMSF.  That trustee must be different from the trustee of the SMSF.  To avoid confusion we’ll call that trustee of the geared asset ‘the custodian’.

Queries about the custodian have come thick and fast.  Does it have to be someone other than the trustee of the SMSF?  Yes. Can it be a member of the SMSF? Yes, it can be one or more of the member/trustees of the SMSF but not all of them. Is it necessary to use a trustee company? No. Can a separate company be set up to be custodian? Yes. Can all the members of the fund be shareholder/directors of that separate company? Yes. Does the custodian have to be completely different from and independent from the SMSF? Clearly not.

For help with your or your clients super gearing needs please don’t hesitate to contact SUPERCentral’s solicitors, TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222 or info@townsendslaw.com.au.