The Australian Taxation Office (ATO) recently announced that one of its key focus areas for 2016-17 is timely and purposeful engagement with the SMSF sector to co-design and develop practical solutions to key issues as they emerge.
It’s certainly a growing area, with the ATOs most recent SMSF Quarterly Statistics reporting an increase of 29,935 in the total number of SMSFs for the three months to June 30th 2016. This consisted of 31,351 new SMSFs being established and just 1,416 SMSFs being wound up. In total, there are now an amazing 577,236 SMSFs registered with the ATO, looking after the retirement savings of more than one million Australians (1,087,841).
The retirement savings total almost $600 billion of net assets.
SMSF Loans Are Increasing
In addition to the number of SMSFs and the value of the investments held, the dollar value of SMSF lending has also increased significantly in recent years, from approximately $1.4 billion in June 2011 to more than $21.8 billion in June 2016. This is not altogether surprising, with the official cash rate dropping from 4.75% in June 2011 to its current level of just 1.50%.
Canstar’s analysis of 67 loans available for SMSFs have found current minimum, maximum and average interest rates as follows, based on a $350,000 loan amount and a loan to value ration (LVR) of 70%.
|Table: SMSF Loans – Interest Rates 2016|
|1 Year Fixed||5.42%||4.84%||6.20%|
|2 Year Fixed||5.32%||4.59%||6.20%|
|3 Year Fixed||5.38%||4.59%||6.20%|
|5 Year Fixed||5.62%||5.09%||6.20%|
Source: www.canstar.com.au. Interest rates are as at 1/10/2016. Based on loan amount of $350,000 and 70% LVR
What investments do SMSFs hold?
The ATO statistics show that the most popular forms of SMSF investment are cash and term deposits, non-residential real property (such as commercial premises) and listed shares.
Compare SMSF Loans
In addition to holding assets, SMSFs hold almost $22 billion on non-recourse lending, so a competitive SMSF loan interest rate is important. You can compare SMSF loans here.