ARTICLE · 13 FEBRUARY 2009

Limited Recourse Borrowing Rules

DLA Piper Australia

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Since 24 September 2007, superannuation funds have been able to borrow to acquire new assets (or replacement assets) provided that certain conditions are met.

AustraliaEmployment and HR

Peter Charteris

Since 24 September 2007, superannuation funds have been able to borrow to acquire new assets (or replacement assets) provided that certain conditions are met. These are set out in section 67(4A) of the Superannuation Industry (Supervision) Act (SIS) under the somewhat misleadingly titled 'Exception – instalment warrants'.

There are a number of requirements:

The borrowing must be to acquire a new asset (or a replacement asset).
The asset must be held on trust so the fund acquires a beneficial interest in the asset.
The fund has a right to acquire the legal ownership of the asset after making one or more payments.
The lender's recourse to the borrower must be limited to rights relating to the asset (or replacement asset).

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