No LRBA Ban for SMSFs Says Assistant Treasurer

The assistant treasurer, Josh Frydenberg, has stated that there will be no ban on self-managed super fund (SMSF) borrowing but there will likely be tougher regulations on the matter.

For some investors, changes to superannuation legislative rules is their main concern when it came to retirement savings.

Frydenberg gave the biggest indication yet that the Abbott government has no plans to ban limited recourse borrowing arrangements (LRBA) through SMSFs to purchase property when he spoke at the annual Tax Institute conference on Friday.

“I want to emphasise that we have been considering this recommendation very carefully but flag that we want to make sure the approach we take is proportionate to the risks that have been identified,” Frydenberg said.

He also stated that only 0.07% or around 6,500 properties were held in an SMSF through LRBA in 2013.

The government recognises that increased leverage could mean increased risks; but the government also recognises that most SMSFs will “do the right thing”.

While a complete ban will not be implemented, tightening of regulations around LRBAs are under consideration.

Information sourced from
No ban to SMSF borrowing, assures assistant treasurer by Julia Corderoy Australian Broker Online 24 August 2015