The core body for self-managed super funds has come out in support of recent Australian Taxation Office figures which show that SMSF borrowings are neither “exponential nor irresponsible”.
While there has been a steady growth in borrowings over the last five years, the SMSF Professional’s Association of Australia (SPAA) says that the ATO figures confirm that loans to SMSFs by banks and other financial institutions are a very small proportion of their total value of loans.
The report shows that between 2008 and 2012, SMSF borrowings increased by 2.6% – from 1.1% p.a. to 3.7%. The average amount borrowed was $122,000 in 2008 compared to $375,000 in 2012.
“The total SMSF asset pool [is worth] more than $500 billion,” SPAA’s director of technical and professional standards, Graeme Colley said in a press release yesterday [1].
“[These figures] hardly suggests that trustees are borrowing without giving it due consideration.”
The data may come as a relief to financial commentators who have raised concerns about the role of SMSF borrowings in creating a housing bubble in Australia.
“I think that’s a concern and that’s one reason why I would advocate some sort of review, just to make sure that you don’t have the combination of excessive behaviour and poor selling practices that are resulting in distorted asset allocation in self-managed super funds,” former chief executive of BT Financial Group, Ian Martin told the Australian Financial Review last October.