Industry submissions received by Treasury in relation to the proposed new licensing requirements for limited recourse borrowing arrangements for self-managed superannuation funds (SMSFs) have reflected strong negative sentiment towards the move.
"Treasury has received 17 submissions in relation to this exposure draft. I was told the vast majority of these 17 submissions said they didn't like the derivative factor and some people had a few other ideas as well," SuperCentral general manager of corporate strategy Tony Negline said.
"But certainly there was strong objection to the need for a derivatives license," he added.
On 9 June this year, Treasury released an exposure draft saying borrowing arrangements inside SMSFs would be treated as a financial product from 29 September onwards.
This meant advisers wanting to offer these arrangements as strategies for their clients would have to provide a statement of advice and would have to be licensed to do so, which would include having a license that would specifically allow them to advise on "derivatives".
However, due to the current state of the federal election and revisions that needed to be made to the draft bill, the proposed time frame for the change had to be amended.
"It means that these new rules, if they were to come in, it would be some time in 2011 before they take effect," Negline said.
"So if advisers are thinking of implementing a super gearing arrangement and don't want to issue a statement of advice in relation to it, they might want to finalise that transaction as quickly as possible," he said.
