Superannuation Industry (Supervision) Act 1993

Subject to this section and section 67A, a trustee of a regulated superannuation fund must not:

borrow money; or

maintain an existing borrowing of money.

Section 67A contains an exception for certain limited recourse borrowing arrangements.

Section 166 imposes an administrative penalty for a contravention of subsection (1) in relation to a self managed superannuation fund.

Subsection (1) does not prohibit a trustee of a regulated superannuation fund from borrowing money if:

the purpose of the borrowing is to enable the trustee to make a payment to a beneficiary which the trustee is required to make by law or by the governing rules and which, apart from the borrowing, the trustee would not be able to make; and

the period of the borrowing does not exceed 90 days; and

if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.

Subsection (1) does not prohibit a trustee of a regulated superannuation fund from borrowing money if:

the purpose of the borrowing is to enable the trustee to make a payment of surcharge or advance instalment which the trustee is required to make under the Superannuation Contributions Tax (Assessment and Collection) Act 1997 and which, apart from the borrowing, the trustee would not be able to make; and

the period of the borrowing does not exceed 90 days; and

if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.

Subsection (1) does not prohibit a trustee of a regulated superannuation fund from borrowing money if:

the purpose of the borrowing is to enable the trustee to cover settlement of a transaction for the acquisition of any of the following:

bonds, debentures, stock, bills of exchange or other securities;

shares in a company;

units in a unit trust;

futures contracts;

forward contracts;

interest rates swap contracts;

currency swap contracts;

forward exchange rate contracts;

forward interest rate contracts;

a right or option in respect of such a security, share, unit, contract or policy;

any similar financial instrument;

foreign currency; and

both:

at the time the relevant investment decision was made, it was likely that the borrowing would not be needed; and

the borrowing is not taken, under a determination made, by legislative instrument, by the Regulator, to be exempt from this paragraph; and

the period of the borrowing does not exceed 7 days; and

if the borrowing were to take place, the total amount borrowed by the trustee would not exceed 10% of the value of the assets of the fund.

Subsection (1) does not prohibit a trustee of a private sector fund from maintaining an existing borrowing of money if:

the trustee had, at a time before 12 June 1986, borrowed the money in circumstances that did not comply with the standard set out in paragraph 16(1)(b) of the Occupational Superannuation Standards Regulations; and

the maintenance occurs before whichever is the earliest of the following:

the day on which the trustee made such arrangements as were necessary to comply with that standard;

the day on which the trustee makes such arrangements as are necessary to comply with subsection (1);

1 July 1995.

Subsection (1) does not prohibit the trustee of a public sector fund from maintaining an existing borrowing of money if:

the trustee had, at a time before 2 July 1990, borrowed the money in circumstances that did not comply with the standard set out in paragraph 16(1)(b) of the Occupational Superannuation Standards Regulations; and

the maintenance occurs before whichever is the earliest of the following:

the day on which the trustee made such arrangements as were necessary to comply with that standard;

the day on which the trustee makes such arrangements as are necessary to comply with subsection (1);

1 July 2000.

Subsection (1) is a civil penalty provision as defined by section 193, and Part 21 therefore provides for civil and criminal consequences of contravening, or of being involved in a contravention of, that subsection.