ATO issues significant revision of LRBA figures - September 2014
The ATO has revised its June 2013 quarter estimates for assets held by SMSFs under LRBAs, revealing a $5.6 billion discrepancy - however, key industry voices have said this is no cause for concern.
The June 2013 quarter estimates for assets held by SMSFs under LRBAs have been revised from $2.6 billion in 2013 to $8.3 billion, according to a statement from the ATO released yesterday.
The ATO now estimates assets held under LRBAs have grown to $8.7 billion as at June 2014.
The updated estimate is partly due to the real growth of LRBAs over the 2012/2013 financial year, but mostly due to the ATO’s different approach to collecting LRBA data and changed labels on the SMSF annual return.
“This new approach means it is difficult to accurately report the growth of LBRAs over the past year. However, it will provide a more accurate point from which to determine growth in the future,” the ATO stated.
“As a result of the new data collection, some amounts previously reported as property assets are now being reported as LRBA assets – representing a decrease of $6 billion for real property assets compared to the $5.6 billion increase in LRBA assets.”
Through its own private research, the SMSF Professionals’ Association of Australia suspected the numbers were too low, senior manager, technical and policy, Jordan George, told SMSF Adviser.
The revised figures therefore appear to be reasonable and accurate, Mr George said.
Mr George stressed SPAA is not concerned by the size of the ATO’s revision, given that LRBAs continue to represent a relatively small proportion of total SMSF assets.
He also noted that over the past 12 months, growth in LRBA use has sat at five per cent.
Similarly, The SMSF Academy’s managing director Aaron Dunn told SMSF Adviser the ATO’s revision is not a cause for alarm.
Mr Dunn said there is no data to suggest a “sizable” uplift in LRBA use by SMSF trustees.
“It’s not something that’s spiralling out of control; it’s simply just a reflection of a readjustment of the deck chairs around how the reporting of it goes,” Mr Dunn said.
“In a time where there needs to be a level of debate around the use of leverage, the debate needs to be had on rational information rather than irrational.”