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LRBAs and related party leases: what you need to know.

Publication date: 07 Nov 14 | Source: RETIREMENT & ESTATE PLANNING BULLETIN

Issue: Vol 17 No 8 September 2014

Pages: pp 129-131

Abstract:

A common strategy implemented by business clients is to acquire business real property via their SMSF and then lease this property to a related party. Borrowings are often used to finance the acquisition.

Complexity arises when the related party tenant wishes to make changes or improvements to the property. 

Does the installation of a fit out contravene the prohibition against related party acquisitions? Do any improvements give rise to a new asset for SMSF borrowing purposes? Does the value of the fit out count as a contribution?

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Author profiles

Daniel Butler CTA
Photo of author, Daniel BUTLER Daniel of DBA Lawyers, Daniel is one of Australia’s leading SMSF lawyers and has worked predominantly in the SMSF, tax and related fields for over 30 years. He is a regular presenter on SMSF topics and has published extensively in professional journals including contributing a monthly article on SMSFs to the Taxation in Australia and other media. Dan is a member of the ATO’s Superannuation Industry Relationship Network (SIRN), the Chair of the Tax Institute’s National Superannuation Committee, a member of the Law Institute of Victoria’s Tax Committee, and is involved with a number of other tax and SMSF committees and discussion groups. Dan presents on the subject Taxation of Superannuation at the University of Melbourne’s Master of Laws/Tax program. Dan is also a Specialist SMSF Advisor. - Current at 29 May 2019
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Tina Conitsiotis
Tina is a Consultant for DBA Lawyers. - Current at 22 July 2013
Click here to expand/collapse more articles by Tina Conitsiotis.