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  • SMSF borrowings and other liabilities

    At 30 June 2014, SMSFs had liabilities to non-members of $17.5 billion, equivalent to 3.1% of total SMSF assets. This consists of $13 billion in borrowings and $4.5 billion in other liabilities, 2.3% 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 LRBAs 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 2014, SMSFs with borrowings increased progressively from 2.3% of SMSFs in 2010 to 6.7% in 2014. The average amount borrowed also increased each year, from $305,000 in 2010 to $373,000 in 201429.

    Over the period, the number of funds reporting borrowings in both accumulation and pension phase increased. On average, 84% of SMSFs with borrowings were in accumulation phase, while 16% were in pension phase.

    In 2014, SMSFs with borrowings invested a larger proportion of their assets in non-residential and residential real property and in assets held under LRBAs, with smaller proportions in cash and term deposits and listed shares.

    Compared to all SMSFs, those with borrowings were more likely to hold non-residential and residential real property, in assets held under LRBAs and other assets. Conversely, they were less likely to hold listed and unlisted trusts and listed shares.

    The majority of SMSFs had other liabilities, an average of 62% over the period. The average amount for other liabilities increased from $12,900 in 2010 to $14,100 in 2014.

    29 Based on 2010 to 2014 SAR lodged data.
      Last modified: 16 Dec 2015QC 47533