Borrow for an investment property using Stake SMSF Trust Deed.

My SMSF was setup with Stake SMSF. Now , I have changed administration toanother SMSF fund administrator. I have been advised by the new fund administrator that stake SMSF trust deed does not need a change to borrow for investment property.

I am not 100% sure as in the Stake SMSF trust deed, it does not call out "property" as part of investment strategy.

From Investment Strategy section of my SMSF deed.

"Key asset types that the Trustee(s) will focus on to achieve higher levels of growth include (but
are not limited to) listed US and international stocks or ETFs, listed Australian shares or ETFs,
managed investments and digital assets including cryptocurrency (either directly held or
exposure via a share, stock, ETF or managed investment structure)."

But it does says

"I am prohibited from borrowing money (or maintaining an existing borrowing) on behalf of the fund except in certain limited circumstances (while limited recourse borrowing arrangements are permitted, they can be complex and particular conditions must be met to ensure that legal requirements are not breached)"

"Borrowing - section 67A and 67B of the SIS Act Arrangements
Pursuant to Rule 4.1.9 and subject to the Relevant Law, the Trustee may:
8.1 borrow monies for the purposes of acquiring asset(s); and"

Has any used the original stake SMSF trust deed to borrow for investment property?

 

Which Stake SMSF product did you have?

 

Stake super for share investment in stake playground only ( < $1000)

 

That clause wouldn't prevent the trustee from borrowing. The trustee should be seeking legal advice on this though

 

Thanks Terry. Yes. Borrowing to invest is covered by but from the Investment Strategy section of my Stake SMSF deed - property investment is not called out as an investment product. It only talk about investment in stocks and ETFs.

"Key asset types that the Trustee(s) will focus on to achieve higher levels of growth include (but
are not limited to) listed US and international stocks or ETFs, listed Australian shares or ETFs,
managed investments and digital assets including cryptocurrency (either directly held or
exposure via a share, stock, ETF or managed investment structure)."

 

The trustee might need to get that amended

 

Did you have a particular reason for changing admin to another provider?

 

I thought you need to be in "Stake Super Plus" ($2490 p.a.) to be able to invest in resi and commercial property?
Stake Super Pricing | An ultra low cost SMSF | Stake

@Hockey Monkey can confirm?

 

That’s my understand too. Perhaps that’s why they are switching

 

But if they set up the SMSF under the standard package, the trust deed wouldn't have property in there right?

 

It’s probably a generic deed

 

Trustee of SMSF is corporate trustee and i will have bare trust and separate company for bare trustee for the loan purpose.

 

That was my thinking as well. I have standard smsf with stake (not property one) but as my new my SMSF administrator- the standard stake trust deed is fine for borrowing to purchase property.

 

I would not expect to find the rules in a heading called "investment strategy"..A deed cannot implement a investmnet strategy but may indicate a need for a investment stategy in the fund rules part of a deed but cannot formulate one.itself. The applicable heading may be "ïnvestments" and may address what is permitted and what is restricted and what is not permitted. It isbnt mandated a deed must approve property ownership but most lenders expect it to be mentioned. And the a s67A borrowing is permitted....as you indicate above

The lender will vet the deed and bare trust deed and may recommend changes. Ask your broker if this can be checked early so delays dont occur. I generally have concerns for aminstration service deeds. Stake are NOT a legal firm but a adminstration service arm of a financial services sales firm. Its a touch conflicted. Deplorable really. Like offering drink deals to AA member meetings. In reality Stake will tell ASIC that YOU setup the SMSF. But I suspect this isnt quite the case. They facilitated it. However its not illegal but highly dubious.