SMSF Association welcomes LRBA clarity

SMSFs/superannuation/ATO/tax/finance/money/LRBA/

30 September 2016
| By Malavika |
image
image
expand image

The SMSF Association has welcomed the clarity provided by the Australian Taxation Office (ATO) on related-party limited recourse borrowing arrangements (LRBAs) and non-arm's length income, and said the complexity required trustees to seek specialist advice.

The ATO's determination, TD 2016/16 set out how self-managed superannuation funds with LRBAs could be in breach of the arm's length arrangements.

The ATO said in circumstances where self-managed superannuation funds (SMSFs) with LRBAs are not on arm's length terms, non-arm's length income (NALI) would arise, and the consequence for doing so would be getting taxed at 47 per cent on income derived from assets attained under these non-arm's length LRBAs.

SMSF Association managing director/chief executive, Andrea Slattery, said the ATO clarification would be "extremely helpful" for what was a very complex issue for specialist SMSF advisers in advising clients.

"With issues such as LRBAs and the possible tax implications, the SMSF Association is always pleased and supportive when the ATO provides determinations that assist in clarifying what can be grey areas in relation to tax," she said.

She added that the complexity highlighted the need for clients to attain specialist SMSF advice when considering this investment option, adding specialist advisers were the only ones with the skill set to grasp the repercussions around LRBAs.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks 1 day ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

TOP PERFORMING FUNDS