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LRBA deadline extended

The ATO has extended its 30 June 2016 deadline to 31 January 2017 for SMSF trustees to review limited recourse borrowing arrangements (LRBA) for non-arm’s length income.

The Tax Office issued the Practical Compliance Guide 2016/5 in April to provide guidance for SMSF trustees to ensure LRBA arrangements are on terms that are consistent with an arm’s length dealing. The extension follows several individual requests to the ATO for further time, highlighting the need for additional ATO guidance.

SMSF trustees with a LRBA that is not maintained at arm’s length by 31 January 2017 will be subject to the top marginal tax rate as income will be treated as non-arm’s length income (NALI). The ATO is set to provide further practical guidance to assist SMSF trustees to make decisions about whether the NALI rules apply to their arrangements.  

The ATO will not select an SMSF for an income tax review purely because it has an LRBA for 2014-15 income years and prior, provided that:

Posted on 15 June '16 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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