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LRBA extension welcomed
The SMSF Association has welcomed the Australian Taxation's Office (ATO) decision to extend the deadline for self-managed superannuation fund (SMSF) trustees to review their limited recourse borrowing arrangements (LRBAs).
The extension to 31 January 2017 gives trustees an extra seven months to take action for their LRBAs to meet the safe harbour terms of LRBAs to be consistent with an arm's length dealing, outlined in the Practical Compliance Guideline 2016/5.
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 per cent.
SMSF Association chief executive, Andrea Slattery, said "the 30 June 2016 deadline was a tight deadline for trustees to take remedial action".
"Feedback from our members prompted us to request the ATO to give SMSF trustees and their advisers more time to take the necessary steps," Slattery said.
"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."
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