Section 67 of the Superannuation Industry (Supervision) Act 1993 prohibits, and then makes exceptions for, the trustees of a fund from borrowing or maintaining an existing borrowing. Limited recourse borrowing arrangements (LRBAs) are of course the biggest and often most contentious exception to the borrowing rules but there are other long standing exceptions that can create confusion and can be misapplied, particularly within an SMSF. Whilst often the emphasis is on the original transaction i.e. “the borrowing”, the second part of Section 67 prohibits a fund from “maintaining a borrowing” which in effect is to say if you have borrowed inappropriately or have borrowed appropriately but failed the repayment conditions then you can also breach the section.
This webinar will work through the various borrowing exceptions, with a particular focus on the issues that often draw the attention of fund auditors. We will also look at the key structural considerations of LRBAs 10 years on from the ATO releasing SMSFR 2012/1 which dealt with the key concepts of LRBAs and how to apply them.
At the end of this webinar, participants will have an appreciation for:
• When an SMSF can and cannot borrow and the time and value restrictions
• Repairs and maintenance versus improvements with LRBAs
• Audit considerations and the SMSF penalty regime for breaching s67
• The considerations when an LRBA comes to an end