The ATO’s Taxpayer Alert TA 2008/05 "Certain borrowings by self managed superannuation funds ", discusses arrangements under which the trustee of a self managed superannuation
fund (SMSF) enters into certain limited-recourse borrowings, which may
not meet the conditions in subsection 67(4A) and/or breach other
provisions of the Superannuation Industry (Supervision) Act 1993 (SIS Act), as well as related superannuation rules.

The ATO has identified 5 features of such arrangements which may give rise to taxation and superannuation regulatory issues.

Trustees are also reminded that existing fund assets cannot be
placed into a limited recourse borrowing without breaching the SIS
regulatory requirements.

The Australian Taxation Office is examining these arrangements.

In separate questions and answers on instalment warrant type arrangements, the ATO discusses instalment warrants in detail.