Uncertainty for unlisted and DIY instalments in super
The proposed changes to gearing rules in superannuation will open a “can of worms” for investors who use unlisted or DIY gearing in their super funds, said Alpha Structured Investments founder Tony Rumble.
Rumble was referring to Government announcements last week that suggested changes to the borrowing arrangements by superannuation fund trustees and amendments to the tax law.
“Although the changes confirm that some forms of instalment gearing can legitimately be used in super, they raise serious questions about unlisted and DIY gearing in super,” he said.
“Gearing products that aren’t listed on the ASX are now seriously in doubt.”
Rumble added that the proposed changes make it clear that the Australian Taxation Office (ATO) will be looking to limit deductions and to impose capital gains tax (CGT) on instalments users, unless the investor uses an ASX-listed instalment.
“The new rules make it clear that investors buying ‘traditional’ instalments are treated as if they are the owners of the assets within the instalment,” he said. “That means that they can claim tax deductions for interest expenses on the instalment loan, and they don’t have a CGT liability when they repay the loan. But the changes also clearly state that the ATO views unlisted and DIY instalments as potentially giving the instalment trustee an interest in the underlying asset — meaning that it’s not clear that the investor can claim a tax deduction for interest expenses, and also making it possible for the ATO to impose CGT when the loan is repaid.”
Recommended for you
With HNW investors representing the largest market for alternative assets, Praemium and CoreData research underscores why this presents a compelling opportunity for advisers.
Having completed the successful integration of Diverger, Count has upgraded its forecast for expected synergy benefits achieved by the acquisition by a third.
Australia’s largest licensee has seen the biggest number of adviser losses over the past week, while the expected wave of new entrants has boosted overall adviser numbers.
Iress has increased its forecast adjusted EBITDA by $5 million for the 2023/24 financial year in light of the sale of its platform business to Praemium and hinted at a return to dividend payments.