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HomeSMSF NewsSelf Managed Superannuation Funds Ruling SMSFR 2012/1 – Limited Recourse Borrowing Arrangements (LRBAs)

Self Managed Superannuation Funds Ruling SMSFR 2012/1 – Limited Recourse Borrowing Arrangements (LRBAs)

The ATO have issued the final SMSF Ruling on LRBAs for SMSFs.

The ruling explains the application of key concepts for the purposes of the LRBA provisions, which
provide an exception to the prohibition on trustees of regulated super funds borrowing or maintaining an existing borrowing of money.  These provisions are found in sections 67A and 67B of the Superannuation Industry (Supervision) Act 1993 (SISA).

The key concepts explained in the final ruling are:

  • what is an acquirable asset and a single acquirable asset
  • when is the asset maintained or repaired and when is it improved
  • whether improvements or alterations result in a different (replacement) asset.

The views in the ruling apply to arrangements entered into on or after 7 July 2010 (including an arrangement that is a refinancing of a borrowing of money under an arrangement entered into before, on or after 7 July 2010).

This final ruling is consistent with the draft ruling, however it has been substantially revised to provide further information and clarify various issues.

Should you wish to discuss this SMSF ruling further, including how it may apply to you and your Fund, please contact The SMSF Accountant today.

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Diana Morris founded The SMSF Accountant in 2010. Diana is a member of the Institute of Chartered Accountants, holds a current public practice certificate, and is a registered tax agent. Diana has completed a Bachelor of Commerce degree and a Graduate Diploma of Chartered Accounting.