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Draft ruling on limited recourse borrowing arrangements.

Publication date: 17 Oct 11 | Source: CCH TAX WEEK

Issue: Issue 38 6 Oct 2011

Pages: pp. 1-5


The Commissioner of Taxation has released his long awaited draft ruling on limited recourse borrowing arrangements, Draft SMSF Ruling SMSFR 2011/D1. LRBAs are borrowing arrangements that may be entered into by the trustees of superannuation funds without breaching the general prohibition against borrowing set out in s 67 of the Superannuation Industry (Supervision) Act 1993. 

The draft ruling deals with three aspects of LRBAs:

  • • the nature of an asset/single acquirable asset

  • • the distinction between maintaining/repairing an asset and improving an asset, and

  • • when an asset becomes a different, or a replacement, asset.


 The draft ruling does not deal with other important issues relating to LRBAs, including the application of the in-house asset rules to the “holding trust” once the borrowing has been repaid.

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Author profiles

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Philip Broderick CTA
Phil is a Principal, and heads the superannuation team at Sladen Legal. He provides advice to SMEs and high net worth individuals in relation to superannuation, SMSFs, estate planning, trusts, business structuring, duty and tax. Phil is a member of The Tax Institute's Superannuation Committee, National Superannuation Convention Committee and the Victorian Superannuation Education Sub-committee. He is also the chair of the Technical Committee for the Self-managed Independent Superannuation Funds Association (SISFA) and a regular attendee at the meetings of the ATO's Superannuation Industry Relationship Network (SIRN). Phil is a regular speaker and author of numerous articles. He has also lectured on superannuation for The Tax Institute's Applied Tax course. - Current at 19 September 2016
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Heather Gray CTA
Heather Gray, CTA, is a superannuation law partner at Hall & Wilcox Lawyers. She has been involved in the development and implementation of superannuation policy through her roles as a member (and former Chair) of the Superannuation Committee of the Law Council of Australia and as a member of regulatory consultative committees and of the Board of Taxation Advisory Panel. A frequent speaker at superannuation conferences, she is a Chartered Tax Adviser, a member of the Australian Institute of Superannuation Trustees and the Australian Institute of Company Directors, and holds Honours degrees in Law and in Arts from the University of Melbourne. - updated by Kathy Xu for Super Day 3180522 - Current at 30 April 2018
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