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Intermediary LRBA legislative instrument registered
The Tax Office has put out a finalised legislative instrument that makes an in-house asset determination in relation to intermediary limited recourse borrowing arrangements.
The Superannuation Industry (Supervision) In-house Asset Determination – Intermediary Limited Recourse Borrowing Arrangement Determination 2020 was registered on 19 May following a public consultation that ended in March.
According to the ATO, the purpose of the legislative instrument is to exclude an SMSF’s investment in the holding trust from being an in-house asset, but only if the intermediary LRBA meets certain requirements described within the instrument.
The legislative instrument applies to intermediary LRBAs established from 24 September 2007 as well as those that might be established in the future.
“SMSF professionals and trustees should ensure any intermediary LRBA complies with the requirements set out in the legislative instrument to avoid any breaches of the super laws,” the ATO said.
“If any uncertainties arise in relation to an SMSF’s compliance with the legislative instrument, trustees can request SMSF-specific advice.”
An intermediary LRBA covers an arrangement involving an SMSF, a holding trust and a lender.
Under such an arrangement, the trustee of the holding trust borrows money as principal from a lender to acquire a single acquirable asset, but the SMSF maintains the holding trustee’s borrowing, meaning the SMSF borrows indirectly through the holding trustee.
Adrian Flores
Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.
You can email Adrian at [email protected].
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