Rise in unscrupulous targeting of SMSFs causes concerns

 The Australian Securities and Investments Commissions’ concerns about aggressive marketing of many geared property investment strategies in SMSFs has been endorsed by the SMSF Professionals’ Association of Australia (SPAA).

Referring to the increase of unscrupulous targeting of SMSFs, particularly in the property space, SPAA senior manager, technical & policy, Jordan George, said that while there is a role for gearing into property through an SMSF, it should only be where trustees have access to best-practice advice from a licensed, qualified advisor.

“In a recent speech to the Tax Institute National Superannuation Conference, ASIC Commissioner Greg Tanzer expressed concern that some trustees were not receiving such advice, simply reinforcing what SPAA has been saying on this issue for the past year,” George said.

However, despite concerns about any increases of unscrupulous activity, he said that it was still not a widely used strategy.

“That said SPAA believes it’s worth noting that despite all the ‘talk’ around this issue, it’s still only a strategy used by a small minority of trustees.

“In our view talk of SMSF gearing being ‘out of control’ is simply not borne out by the facts. At June 2013, SMSF statistics show that only 0.5% of SMSF investments have limited recourse borrowing arrangements, and that this investment category has grown at less than 2% over the past four quarters to 30 June 2013.  This level of involvement has been confirmed by one of the big four banks.”