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SMSF Limited Recourse Borrowing – The Old, the New and the Controversial

Published on 27 Oct 2010 | Took place at The Mantra on Russell, Melbourne, VIC

The SIS Act rules governing borrowing by SMSFs changed on 7 July 2010 and consequently any borrowing arrangements from that date must comply with the new rules. The new rules and the ATO’s view of their application are set to create many issues for SMSFs and lenders alike. Meanwhile pre 7 July 2010 borrowing arrangements will generally continue to be governed by the old rules, but may be caught by the new rules in certain circumstances. Additionally many tax issues relating to the trust structure under an SMSF borrowing arrangement remain unanswered.

So while SMSF borrowing is an increasingly important tool available to all SMSFs, it is also a highly technical area that must be structured correctly.

This session examined the old and the new rules relating to SMSF borrowing. It also looked at the latest announcements in this area; including the ATO’s views on the old and the new rules and the Government's 'lookthrough' tax treatment announcement.

Individual sessions

SMSF limited recourse borrowing - The old, the new and the controversial

Author(s):  Philip BRODERICK This paper covers:

  • why was the limited recourse borrowing exception changed?
  • a summary of the old and new borrowing requirements
  • asset requirements
  • limited recourse requirements.
Materials from this session: