The Australian Taxation Office has cleared up an area of confusion for the trustees of self-managed superannuation funds who plan to borrow. Trustees have been unsure whether trusts set up as part of SMSF borrowing arrangements might breach the rule that prohibits investments in "in-house assets".Under the provisions of the Superannuation Industry (Supervision) Act that cover borrowing, the title to an asset acquired with borrowed funds must be held in a separate trust for the SMSF until the loan has been repaid.Trustees and their advisers have been concerned that in some circumstances this related trust could put them in breach of the prohibition on related party (in-house) investments.A partner at Gadens Lawyers, Amber Warren, said in a note to clients: "Under the [ATO's] instrument, an investment by an SMSF in a related trust in compliance with [the borrowing provisions of the act] will be exempt from being an in-house asset."The head of technical and professional standards at the SMSF Professionals' Association of Australia, Graeme Colley, said: "This will go a long way towards resolving some of the technical issues that were impeding the practical implementation of the law around [SMSF borrowing]."Colley said the change would mean that the need for paperwork associated with the transfer of the property once the loan had been paid would be eliminated.He said the ruling would also overcome the problem of double stamp duty that arose in some states.The ruling (which was made by way of a legislative instrument) will apply retrospectively, from September 2007. The ATO is seeking comment on the instrument.