Superannuation gearing products, including instalment warrants, will become financial products under a new proposal by the federal government.
If the proposal is adopted, then only licensed financial services providers will be able to offer these borrowing arrangements to trustees.
"The amendments will extend the government's consumer protection framework to cover certain superannuation borrowing arrangements, such as instalment warrants, and thereby help protect the savings of fund members," Superannuation and Corporate Law Minister Chris Bowen said yesterday.
The minister proposed to amend the Corporations Regulations 2001 in order for these arrangements to be recognised as financial products under the Corporations Act 2001.
The Superannuation Industry (Supervision) Act 1993 already allows superannuation trustees to use instalment warrants, but the amendments will give investors better protection, Bowen said.
The government also announced plans to amend the tax law in order to provide investors with capital gains tax relief over instalment warrants.
"These changes will ensure investors in instalment warrants over listed securities don't have to meet their capital gains obligations until they sell those investments," Assistant Treasurer Nick Sherry said yesterday.
The proposed amendments are largely a confirmation of existing tax practice, Sherry said.
The income tax amendments will apply for assessments for the 2007/08 and later income years.
