|A related party limited recourse borrowing arrangement (LRBA) is a loan between a non-bank (related party) and a SMSF for acquisition of property or listed security to be held in the SMSF.
Trustees of SMSF’s that currently have a LRBA in place for a property or listed security need to ensure that these LRBA’s are in line with the new safe harbour provisions set out by the tax office in relation to:
– Interest Rate
Where a LRBA is not in line with the safe harbour provisions, trustees have the options to:
– Change the terms so they are consistent with arms – length dealing by 31 January 2017
The tax office has advised trustees of SMSF’s have until 31 January 2017 to ensure their LRBA is in line with the safe harbour provisions, including correcting their treatment during the year ended 30 June 2016.
Please contact Andrew Marshall or Janine Orpwood at Langley McKimmie Chartered Accountants on (03) 5427 8100 to discuss further.