SMSF average borrowing at $357,000, but not "irresponsible": SPAA

Despite Australian Taxation Office figures showing significant growth over the five years to the end of June 2012, SMSF Professionals' Association of Australia (SPAA) director of technical and professional standards, Graeme Colley said that there is little suggestion it has been "exponential or irresponsible".

SMSF borrowings increased from 1.1% per year in 2008 to 3.7% in 2012, the ATO statistics reveal, however Colley said that it must be remembered that this is just 3.7% of the entire SMSF pool of more than $500 billion.

“This hardly suggests that trustees are borrowing without giving it due consideration," said Colley.

When looking at it in dollar terms, he notes that the average amount borrowed in 2008 was $122,000, while the average amount borrowed in 2012 was $357,000.

“SPAA’s understanding of the current situation is that borrowing has not increased significantly since 2012 and remains a very small proportion of the total value of loans made by banks and other financial institutions," he said.

“The lending criteria placed on superannuation funds that borrow for limited recourse borrowing arrangements is more stringent than loans taken out by individuals for residential property and commercial property – a fact often overlooked.”

He also noted that the borrowings are not just for property assets, but also any asset class permitted under superannuation legislation.

jduke@propertyobserver.com.au