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Senate passes new legislation on LRBAs

Miranda Brownlee and Katarina Taurian
14 September 2015 — 1 minute read

Legislation that is said to remove the uncertainty around the tax treatment of limited recourse borrowing arrangements (LRBAs) is likely to be enacted in coming days.

Townsends Business & Corporate Lawyers special Counsel Michael Hallinan told SMSF Adviser in early July that the Tax and Superannuation Laws Amendment (2015 Measure No 2) Bill 2015 will clear up confusion about whether the holding trust is a taxable entity in its own right.

The legislation passed both the House of Representatives and the Senate last week.


“This legislation says that for taxation purposes you treat the arrangements as if the property is held directly via the super fund. That’s for income tax, capital gains tax and GST,” Mr Hallinan said.

“As long as the fund is a complying fund and the arrangement qualifies as a LRBA, we now no longer have any tax issues or tax uncertainties. So there was just that little bit of uncertainty and it really makes it apparent that the tax position, that everyone basically acted upon, was the tax position.”

However, DBA Lawyers director Bryce Figot said the legislation may create more confusion in regards to whether or not the holding trust becomes a relative fixed trust that lodges its own income tax return once the LRBA is paid out.

“In many ways, this legislation isn’t curing a problem but rather creating a new problem,” he said.

Read more:

Tax threat looms for SMSFs with overdue returns

Yield warning issued to SMSF property investors

Beware ‘hawking’ risks, accountants told

Senate passes new legislation on LRBAs
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