Until 4 April this year, SMSF trustees with limited recourse borrowings that were ending were faced with a problem. With the loan paid off, there was the prospect of being forced to transfer the asset to the SMSF trustee. The fear had been that to keep the asset inside the trust would give rise to [read more]
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 [read more]
Can an asset be left in an LRBA bare/holding trust once the loan is paid off? The short answer is probably going to soon become yes. I will explore this fully in this article. In exploring this, a very critical tip for advisers emerges: it is vital that the deposit is paid from a bank [read more]
Since 2010 I’ve been lecturing at Melbourne University, presenting the SMSF component of the Master of Laws subject ‘Superannuation Law‘. Melbourne University is my ‘alma mater’. I fully enjoyed studying there for my undergraduate degrees and masters degree and I’m always very happy to be able to give back to the legal community. I’m lecturing [read more]
Traditionally, SMSF trustees have effected insurance for members under a self-insurance model. This involves the SMSF trustee to take out, say, death insurance on a particular member. In the event of a claim, the insurance proceeds are allocated to the relevant member’s account in the fund. The proceeds can then be paid to the member [read more]
A regulated super fund trustee can borrow, but only subject to very prescriptive rules. One such rule is that each ‘single’ asset must be purchased with a separate limited recourse borrowing arrangement. (See, among other things, SMSFR 2012/1.) Accordingly, if a super fund trustee wants to borrow to buy two assets, this might well be [read more]
This article outlines some of the key international issues facing SMSFs today and addresses the practical skills necessary to ensure that these matters are handled effectively. SMSF residency SMSFs are generally not appropriate for people who spend extended time overseas. Such funds can easily lose their complying status and suffer significant tax penalties. Residency requirements [read more]
Introduction The ATO acknowledge on their website that related parties can lend to SMSFs. However, many related parties wish to not just lend to an SMSF, but lend to the SMSF on very friendly terms, including nil interest rates. Many have said that this arrangement is okay, while others have gone so far as to [read more]
We consider the latest in SMSF borrowing, focusing on when a holding trust is a bare trust and why it matters. Is a ‘holding trust’ a bare trust? The status of the ‘holding trust’ may have a significant bearing on the LRBA’s long-term CGT and related tax efficiency. Bill Shorten, the then Assistant Treasurer announced [read more]
