Hot Issues
spacer
The global economy at midyear: How our views have changed
spacer
The biggest global corporations since 1998
spacer
‘Retrospective’ LRBA measures tipped to cause headaches
spacer
Downsizer Super Contribution
spacer
Keep track of how Australia is really ticking over.
spacer
Insights from the 2019 Vanguard / Investment Trends SMSF survey
spacer
What falling interest rates mean for investors
spacer
ATO releases ‘welcome guidance’ on death benefit income streams
spacer
Super growth reducing age pension drawdown
spacer
Big four firm outlines new financial year checklist for SMSFs
spacer
Asset allocation as you age
spacer
Australia - the story goes on.
spacer
Consolidate your super and save
spacer
Critical documentation steps flagged with switching SMSF loans
spacer
Good investment habits versus damaging biases
spacer
Control considerations flagged with death benefit pensions for children
spacer
Interest rate for SMSF loans set to rise under safe harbour terms
spacer
Recession on our mind
spacer
What it will take to close the super gap between men and women
spacer
Australia - How are we going as 2018-19 ends?
spacer
LRBAs, guarantees in need of review after property market falls
spacer
Average age for establishing SMSFs sitting at 48.9: Report
spacer
ATO updates valuation guidelines for pension reporting
spacer
ATO figures show jump in starting balances for SMSFs
spacer
Your personal financial register
spacer
Australia’s $4bn Super blackhole impacting self-employed most
‘Retrospective’ LRBA measures tipped to cause headaches

With the government reintroducing its total super balance measure for SMSF loans, technical experts have warned that the retrospective nature of the change could pose issues for SMSF clients purchasing property this year.

       

 

Last week, the government introduced Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 into parliament. The bill includes a previously lapsed measure that will see the outstanding balance of an LRBA added to a member’s total super balance for certain SMSFs.  

SuperConcepts general manager of technical services and education Peter Burgess said the bill, which applies to all LRBAs entered into from 1 July 2018 onwards, was expected to pass imminently given other politically sensitive measures in the legislation had been dropped.

“The SG [super guarantee] amnesty measure has now been removed and the remaining measures are largely integrity measures, [so] this bill is no longer controversial from a political perspective, and therefore, we expect it will receive an easy ride through parliament,” Mr Burgess told SMSF Adviser.

Australian Executor Trustees senior technical services manager Julie Steed said the retrospective nature of the bill poses an issue for SMSF professionals looking at property strategies in the current financial year.

“The 1 July 2018 proposed start date for the LRBA measure may mean clients looking to undertake transactions in 2019–20 need to factor the varied total super balance calculation into their actions,” Ms Steed said.

However, Heffron SMSF Solutions head of SMSF technical and education services Lyn Formica added that not all trustees would be affected by the rule changes, so it was important to look at the specifics of the legislation before changing a client’s strategy.

“The first thing would be to identify whether the SMSF will be caught by the proposed changes — many SMSFs won’t be as the bill only captures new LRBAs... where the lender is a related party of the fund or the member has satisfied a condition of release with nil cashing restrictions,” Ms Formica said.

“Even if the member will have a proportion of the outstanding LRBA debt included in their TSB, that may not be disastrous if they weren’t planning on utilising any strategies for which TSB is relevant, e.g. making non-concessional contributions [or] utilising the catch-up concessional rules.”

For now, however, SMSFs preparing their annual return for the 2019 financial year still need to abide by previous reporting rules when it came to LRBAs, Ms Formica said.

“SMSFs should complete their 2019 annual return reporting the members’ proportion of the outstanding LRBA debt of all LRBAs, regardless of whether or not the LRBA will be captured by the new measures,” she said.

“We expect new instruction will be released if or when the bill receives royal assent, as otherwise the ATO will have no way of correctly calculating each member’s total super balance.”

 

 

Sarah Kendell
30 July 2019
smsfadviser.com

 

Pattinson Financial Services Pty Ltd ABN 17 121 851 376 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd
ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523

Tel: +61 2 8850 6888 | Fax: +61 2 8850 6407 | Toll Free 1300 466 637 | PO Box 6253 Baulkham Hills BC NSW 2153

site By PlannerWeb