Borrowing provided Does Not Require to Be an Installment Warrant
Borrowing provided does not require to be an installment warrant
The tax office has issued tax payer alert on 4th April 2008. One of the new features of the new law relates the issue of an installment warrant. The circumstances of the borrowing provision approved by the legislation do not need the provision to be an installment warrant or a warrant. This is important in a few aspects.
Primarily, the significance is that the new law is not limited to preventing traditional installment warrant and warrant type provisions in listed securities of the kind provided by financial establishments. The provision of borrowing is accessible for using it to obtain every kind of assets provided that the asset is an asset which can be obtained by a super fund under the present SIS Act conditions, and the borrowing provision complies with the conditions of the present law.
Next, there exists an Australian financial services license (AFSL) issue. The installment warrants provided by the financial establishments are normally warrant-based financial products. Therefore, the financial establishments need an AFSL to distribute the product and it is essential to have an AFS license or approval to offer financial product advice to a SMSF regarding investing in the product. The significance is that the lenders is not distributing a financial product and so does not need an AFSL. As a result, the lender can be an associated person of the SMSF. It also indicates that SMSF consultants, not AFS licensees, like an accountant; do not need an AFSL to counsel the SMSF about the borrowing provision.
