ato clears borrowing by diy super funds

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    Do-it-yourself superannuation funds have been granted permission to borrow money, but the loans must be made on a commercial basis and must meet other criteria, The Weekend Australian Financial Review reports.

    According to the paper, the Australian Taxation Office (ATO) alert confirms that laws passed last year allowed DIY funds to borrow to invest in a larger range of assets, although Minister for Superannuation and Corporate Law, Nick Sherry, has not ruled out changes by the Labor government.

    Last year's laws allowed super funds to borrow to buy investments if the borrowing was limited recourse.

    But the tax office has issued the following warning: "We are concerned where borrowings feature non-commercial interest rates, or where there is capitalisation of interest, or where members provide personal guarantees secured beyond charges over the asset purchased," tax commissioner Michael D'Ascenzo said.

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