Recent ATO materials suggest non-arm’s length limited recourse borrowing arrangements will give rise to huge tax problems.
More specifically, the materials suggest income derived can be non-arm’s length income (ie, taxed at 45%) where the LRBA favours the SMSF.
This could come as a shock as many have incorrectly said the ATO has previously ‘green lighted’ nil interest LRBAs.
Want to know more?
We will discuss this in great detail in DBA Network Pty Ltd’s next SMSF Online Update. It will be presented live on Friday 11 April 2014 12:00–1:30 pm (AEST). Recorded versions can be pre-purchased too. For more details, or to register, please visit http://www.dbanetwork.com.au/dbalawyers/seminars3/1119/1683/SMSF-Online-Updates.html
We will cover:
- But didn’t the ATO say it was okay?’ — a recap of why many incorrectly said the ATO previously ‘green lighted’ nil interest LRBAs
- The ins and outs of what the ATO have said
- Are the ATO actually right?
- What ‘arm’s length’ actually is
- What to do if you already have an LRBA that favours the SMSF
- What to do if you are thinking of entering a related party LRBA
- Much, much more
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This article is for general information only and should not be relied upon without first seeking advice from an appropriately qualified professional.