Liquidity requirements a fillip for peer-to-peer lending

Grant Abbot

Grant Abbott

With a change in leadership of the current coalition government to Malcolm Turnbull there have been rumblings that all parts of the tax equation are up for review, including superannuation.

However, the SMSF Members Association is more than pleased with the government’s wait-and-watch approach on limited recourse borrowing arrangements (LRBA). As the government has noted, it is not a significant problem and one that is more of a beat-up by other non-SMSF players that could easily adopt this strategy for clients, but realise there is no money in it and thus have no inclination to do it.

One big concern of ours is the banks pulling back on this type of lending due to the Australian Prudential Regulation Authority capital requirements. Unfortunately for them that will enable SMSF-to-SMSF lending to flourish, meaning they may well rue the day of the pullback. SMSFs have no capital requirements and with tight lending and funding policies and strong documentation, the idea of an older member SMSF seeking a 15-year annuity at a set rate lending to a younger member SMSF entering into an LRBA has wide appeal.

In terms of changes to the superannuation tax mix, many times the SMSF Members Association has surveyed our members about the government interfering with superannuation savings that have been built for the purpose of self-providing long-term retirement income. The results have overwhelmingly shown our members do not want the government to meddle with their superannuation. As one member said: “I find it absolutely disgusting that governments are tampering with long-term investments that are supposed to ultimately reduce reliance on government pensions. The government is hardly showing any restraint itself in its generosity to its politicians and public servants.”

As we have stated on a number of occasions, the SMSF Members Association was established to provide a voice for its members and is not represented by vested money interests of acting for professionals who make a living off SMSF members. To make your voice powerful as we move into the next stage of legislative change, we need to have a strong support base so the powers that be understand we are not trying to rip off the tax system, but are playing by the rules and providing much needed capital to the Australian economy.

We have some grand ideas, such as long-term infrastructure bonds and ways to helping our children into the difficult capital city housing markets. But to make our voice heard, we need two things to happen:

Boost membership: Currently our membership is over 5000 and growing steadily. We have been very lucky to secure some great kick-start partners to carry the sponsorship of members until 1 July 2016 and possibly beyond. There is no barrier to entry for SMSF members to become part of the SMSF Members Association as new and existing membership has been funded. Therefore, we need to encourage all SMSF members to get like-minded SMSF members who want to protect their life-time super savings to join – our voice is only as strong as our numbers. Joining is easy through the website, so please get your friends and family with an SMSF to join.

Get to our Inaugural SMSF Members Conference: Our first ever conference is to be held at Doltone House at Jones Bay Wharf on 26 and 27 February 2016. It will be a great two days, with the theme of the conference Growing, Protecting and having Fun with your SMSF. Invitations will be out in November, but we ask you to save the date and get your travel plans in order. We look forward to seeing you all there and letting you meet other members who hold a voice just like yours. You will learn, interact and have fun over the two days and also have the opportunity of making your voice heard to members of government.

These are the two immediate and most pressing issues for the SMSF Members Association board. We all look forward to creating a wonderful organisation that meets the needs of its members, but more importantly grows and protects their hard-earned savings and life-time retirement income – we can’t let it be attacked.

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