SMSF borrowings and other liabilities
At 30 June 2013, SMSFs had liabilities to non-members of $13 billion, equivalent to 2.6% of total SMSF assets. This consists of $9.2 billion in borrowings and $3.8 billion in other liabilities, 1.9% and 0.8% of total assets respectively (see appendix 1, table 15).
SMSFs are prohibited from borrowing money, except in certain limited circumstances permitted under the SIS Act. These circumstances include limited recourse borrowing arrangements that meet certain conditions. Other liabilities are obligations the SMSF has to non-members that do not fall under borrowings.
Over the five years to 2013, SMSFs with borrowings increased progressively from 1.5% of SMSFs in 2009 to 5% in 2013. The average amount borrowed also increased each year, from $217,000 in 2009 to $366,000 in 2013.
Over the period, the number of funds reporting borrowings in both accumulation and pension phase increased. On average, 89% of SMSFs with borrowings were in accumulation phase, while 11% were in pension phase.
In 2013, SMSFs with borrowings invested a larger proportion of their assets in non-residential and residential real property and in assets held under limited recourse borrowing arrangements, with smaller proportions in cash and term deposits and listed shares.
Compared to the total SMSFs, those with borrowings were more likely to hold non-residential and residential real property, in assets held under limited recourse borrowing arrangements and other assets. Conversely, they were less likely to hold listed trusts and listed shares.
The majority of SMSFs had other liabilities, although the proportion has fallen from 67% in 2009 to an average of 62% over 2010–2013. Similarly, the average amount for other liabilities also fell from $13,600 in 2009 to $12,600 in 2013.