| Description | Softcopy * |
|---|---|
| Currently fund has a bank lender and the refinance will not require the asset to transfer to a new security trustee | $1,450 |
| Currently fund has a related party lender and the refinance will not require the asset to transfer to a new security trustee | $1,850 |
| The refinance will require the asset to transfer to a new security trustee | POA |
| * Add $100 for hard copy per arrangement. Pricing includes GST |
|
Section 67A(1)(a)(ii) of the Superannuation Industry (Supervision) Act 1993 (Cth) allows for the refinancing of a limited recourse borrowing arrangement loan subject to strict criteria being complied with. The DBA loan refinance document suite provides the necessary documents to refinance such a loan.
Why should you refinance a loan?
Where an SMSF trustee has borrowed from a related party (non-bank lender) in connection with an LRBA, the loan must be on arm’s length terms; otherwise the ATO may view any income and capital gains derived in relation to the LRBA as non-arm’s length income and apply a 45% tax.
The ATO has released Practical Compliance Guideline (PCG) 2016/5, which sets out ‘safe harbour guidelines’ that effectively provide a standardised set of loan terms that in the ATO view equates to arm’s length terms for real property and listed shares and listed units. LRBAs that are structured in accordance with these guidelines will generally be taken to be consistent with an arm’s length dealing and the non-arm’s length income provisions should not apply purely because of the terms of the borrowing arrangement. Naturally expert advice should be obtained to ensure any proposed LRBA is fully compliant.
Those who are concerned their related party loan is not on arm’s length terms might consider changing the terms to replicate the safe harbour guidelines or to ensure that the parties are in the same position they would have been in had they dealt at arm’s length.
DBA Lawyers can assist with refinancing the terms of a related party loan. We can also provide advice and assistance at our hourly fee rates.
What’s included
- Covering letter
- Trustee resolutions
- Loan agreement
Please note that mortgage, charge or security documents are not included in the document suite. These are usually prepared by the lawyer handling the client’s property work. We can provide a referral, if needed.
