Self-managed superannuation fund (SMSF) documentation specialists Cleardocs have updated their service to cover certain related party borrowing arrangements.
Trustees will now be able to use Cleardocs' documents for SMSF loans from related parties that have either variable or fixed interest rates, and have multiple or single draw downs.
In regards to the treatment of interest rates, the amended Cleardoc forms will record transactions that involve both interest and capital payments being made at the same time, arrangements where interest-only payments are made for the first five years and both interest and capital payments are made after that period, an arrangement that is fixed interest only, and transactions that begin with a fixed interest that can be varied at a later date.
But the new set of documents cannot cater for variable interest rate borrowing arrangements where the interest rate is adjusted by a third party loan provider.
In relation to draw downs on the loans the new documentation will allow SMSF trustees to record transactions that consist of a single draw down upon settlement, or arrangements that incorporate more than one draw down event.
According to the service provider this could an arrangement where a draw down is needed for an initial deposit with a subsequent one to be made upon settlement.
