Non-arm's length income in LRBAs: Examining the Commissioner's position
Source: Taxation In Australia Journal Article
Published Date: 1 Oct 2015
Generally, self-managed superannuation funds are prohibited from borrowing money under s 67(1) of the Superannuation Industry (Supervision) Act 1993, but s 67A provides an exception that allows a fund to borrow money provided that the borrowing is structured in a particular way. This article examines the Australian Taxation Office's recently announced position on loans to a superannuation fund from a related party that are on terms that are more favourable to the fund than the terms that would apply to a loan from an unrelated party, such as a bank, in the context of limited recourse borrowing arrangements and the non-arm's length income rules in s 295-550 of the Income Tax Assessment Act 1997.
The article critically examines the arguments put forth by the ATO in ID 2014/40 and concludes that the ATO's reasoning relies on a flawed interpretation of the Full Federal Court decision in Allen v FCT in 2011.
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Details
- Published By: Angus Tainsh
- Published On:1 Oct 2015
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