The SMSF Association applauds the ATO’s decision to give SMSF trustees an extra seven months to review the terms of their limited recourse borrowing arrangements (LRBAs) to ensure that they are either consistent with an arm’s length dealing or wound up.
The ATO announced today that the 30 June 2016 deadline for SMSFs with LRBAs to take action in order for their LRBAs to meet the safe harbour terms in Practical Compliance Guideline 2016/5 would be extended to 31 January 2017.
Practical Compliance Guideline 2016/5, issued on 6 April 2016, sets out the safe harbour terms by which SMSF trustees can structure their LRBAs to be consistent with an arm’s length dealing.
LRBAs that are not held on arm’s length terms are liable to having income generated from the investment taxed as “non-arm’s length income”, attracting a tax rate of 47%.
SMSF Association CEO/Managing Director Andrea Slattery says: “We welcome this extension of time granted by the ATO.
“The 30 June 2016 deadline was a tight deadline for trustees to take remedial action to ensure that their LRBAs were being held on an arm’s length basis. Feedback from our members prompted us to request the ATO to give SMSF trustees and their advisors more time to take the necessary steps.
“This extension of time shows that the ATO is listening to the SMSF sector’s concerns as well as reinforcing why we believe it is the right regulator for our part of the superannuation industry.
“We also welcome the ATO providing further information and examples of how SMSFs can comply with PCG 2016/5 by 30 September 2016,” she says.
About the SMSF Association:
The SMSF Association is the authoritative voice for the self-managed superannuation fund sector. The Association, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs as well as engaging trustees to become better educated and informed. The SMSF Association is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.
Contact for interviews:
SMSF Association Managing Director/Chief Executive Officer
M: 0417 898 317
M: 0409 585 979