The ATO is allowing trustees of self managed superanuation funds (SMSFs) an extension from Thursday 30 June until 31 January 2017 to ensure that any limited recourse borrowing arrangements (LRBAs) of their funds are on terms consistent with an arm’s length dealing or are brought to an end.
The ATO says it will provide further information and illustrative examples to assist SMSF trustees and advisers to make decisions about relevant arrangements by Friday 30 September.
Accordingly, it will not select an SMSF for review purely because it has an LRBA for the 2014-15 income year and prior years, provided that:
• the SMSF trustee ensures that any LRBA’s that their fund has is on terms consistent with an arm’s length dealing, or is brought to an end by 31 January 2017, and
• payments of principal and interest for the year ended Thursday 30 June 2016 must be made under LRBA terms consistent with an arm’s length dealing by 31 January 2017.