This draft Self Managed Superannuation Funds Ruling was released on 17 September 2008 for public comment by 31 October 2008. Its full title is "Self Managed Superannuation Funds: the meaning of 'borrow money' or 'maintain an existing borrowing of money' for the purposes of section 67 of the Superannuation Industry (Supervision) Act 1993".
The draft Ruling states that the prohibition and exceptions in s 67 only apply to borrowings of money. Therefore, for the purposes of s 67, a borrowing is an arrangement that exhibits two necessary characteristics:
- a temporary transfer of an amount of money from one entity (the lender) to another (the borrower); and
- an obligation or an intention on the part of the borrower to repay that amount to the lender (which may be satisfied by the provision of an asset).
The draft Ruling deals with payments made on behalf of a SMSF by a third party, such as a trustee or member, and concludes that where an immediate reimbursement is sought and received, there is no contravention of s 67(1)(a): see paras 64-65. The contrary conclusion is drawn where there is a deferred repayment of an amount paid on behalf of the SMSF.
For a copy of SMSFR 2008/D4, go here