borrowing into smsf's, page-24

Lindso47 et al

I haven't read all the posts, but if you are referring to refinacing an 'instalment warrant arrangement', as far as I know the ATO have specifically indicated that this is one of the issues they have not yet developed a formal view on.

Their Q&A has not been updated therefore it must still be an issue.

I expect they will tackle 'creative' refinancing inititives rather than just the standard plain vanilla refinancing.

Relevant reference from their QnA is below:

"Other issues under consideration

There are issues, listed below, in respect of which the Tax Office does not yet have a formal view. To the extent that these issues arise under a given arrangement, there may be concerns whether the arrangement complies with the law. These issues are:

- Does an arrangement where a borrowing is guaranteed by a third party satisfy the new laws, particularly where the personal guarantee is provided by a member or a related party?
- Does an arrangement that permits re-financing satisfy the new laws?
- Does an arrangement that permits capitalisation of interest satisfy the new laws?
- Can multiple drawdowns from a single loan facility satisfy the new laws?

Other issues that are still being considered include:

- What constitutes an ‘original asset’ and a ‘replacement asset’ for the purposes of the new law?
- What constitutes ‘maintaining a borrowing of money’?

This publication will be updated when the Tax Office’s view is settled."


Of course the above is not saying it cannot be done...but its not saying it CAN be done either...if the ATO form a dim view of refinancing, I would expect them to require the unwinding of affected arrangements.

Thanks for the response from SA govt.

Cdchi1