TECHNICAL ARTICLES

In 2016, the ATO released compliance guidelines for related party limited recourse borrowing arrangements (LRBAs). This article reviews the Practical Compliance Guidelines (PCG 2016/5) and considers their ramifications. Background In November 2015, the ATO updated its Interpretative Decisions on limited recourse borrowing arrangements and non-arm's length income (NALI), when it…

Trustees of SMSFs have many issues to deliberate when considering the purchase of a property as an investment for their SMSF. That includes whether they will utilise the SMSF limited recourse borrowing provisions under the SIS Act, or purchase the property using available funds. This paper will consider five key…

In September 2016, the ATO released a Taxation Determination TD 2016/16 which provided guidance to trustees who could not, or who decided not to, meet the Safe Harbour guidelines of the previously released ATO Practical Compliance Guidelines on related party limited recourse borrowing, PCG 2016/5. With a rather lengthy title…

The findings of the Financial System (Murray) Inquiry included a recommendation that limited recourse borrowing by superannuation funds be stopped. Where does that leave SMSF trustees and their advisers with their longer term planning? Financial System Inquiry On 7 December 2014, the Government released the final report of the Financial…

Inadequate may seem harsh but, in releasing 2 Interpretative Decisions, the ATO has missed the opportunity to provide positive guidance to SMSF trustees and their advisers. On 12 December 2014, the ATO released 2 Interpretative Decisions concerning limited recourse borrowing arrangements and non-arm’s length income. This paper explains what could…

This article examines the three key concepts relating to SMSF borrowing arrangements as per ruling SMSFR 2012/1. Summary The ATO ruling SMSFR 2012/1 provides a common sense approach to assets held in a SMSF borrowing arrangement. The general outcomes of SMSFR 2012/1 are as follows: The definition of the term…

In this article, we summarise some of the more pertinent rulings and releases from the ATO and the State Revenue Offices to provide you with a general overview of their respective positions. Whilst SMSF Borrowing has been permitted under the superannuation legislation since September 2007, the regulatory interpretations regarding the…

In this article, we summarise a number of SMSF borrowing scenarios that have been brought to our attention – including ones that work and ones that require a little more thought. Scenarios that work Buying Residential Property off the Plan Jack and Jill are trustees of the JackJill Super Fund.…

Can a single trustee act as trustee of more than one bare trust? This article considers the arguments over this question and provides our opinion on the matter. Confusion exists, and differing opinions prevail, regarding the possibility of a single bare trustee acting as trustee of multiple bare trusts and…

As a market leader in SMSF borrowing documentation, Topdocs has compiled a list of commonly asked questions regarding SMSF borrowing arrangements (formally known as ‘limited recourse borrowing arrangements’) to help SMSF trustees and their financial advisers. Please note the following Q and As reflect changes relating to SMSF borrowing arrangements…