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12 Nov 10 ATO workshop on limited recourse borrowings arrangements

Gabrielle Teys FTIA (JB Were) and Tamera Lang ATIA attended a workshop convened by the NTLG Superannuation Sub-group on the limited recourse borrowings arrangements (LRBA) legislation. The purpose of the workshop was to discuss issues raised in submissions drafted by the professional bodies. The issues were grouped into 13 categories: the meaning of "single acquirable asset"; in-house assets and holding trusts; asset improvements and replacement assets; the meaning of "arrangement"; off-the-plan purchases; personal guarantees; issues arising from ATO ID 2010/172 - joint investors; issues arising from ATO ID 2010/162 - arms-length; draw down from loans; refinancing of a LRBA; GST payable on transfer to an asset to a fund; encumbrances on an asset subject to a LRBA; and whether reg.13.22C can apply on repayment of a loan. The ATO were keen to hear about the commercial aspects of LRBAs, which may have an impact on how the law is applied. The ATO do not have settled views on many of the issues. When they settle their views, we can expect to see interpretative products (e.g. rulings, determinations etc) to assist taxpayers navigate this new area.

A lot of material was covered in the meeting, and if you are particularly interested about any of the issues list above, please contact us at Tax Policy.

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