SMSFR 2012/1 – 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.