Legislation including Limited Recourse Borrowing Arrangements in the Total Superannuation Balance is expected to be ready to be introduced to Parliament later in 2017.
Draft legislation including Limited Recourse Borrowing Arrangements (LRBAs) in the Total Superannuation Balance and Transfer Balance Cap was released earlier in 2017. However when the legislation was introduced to Parliament, in a Bill which has since passed and received Assent, it only included LRBAs in the Transfer Balance Cap. Treasury was reportedly consulting on how to include LRBAs in the Total Super Balance.
Jordan George, Head of Policy for the SMSF Association, who has knowledge of the consultation process, expects such legislation to be ready towards the end of 2017.
Speaking at the SMSF Association Technical Day conference in Brisbane, Mr George said the Association voiced it’s “strong concern” to the Government about including LRBAs in the Total Super Balance when the proposed change was announced.
“Hopefully we will get a narrower set of provisions around this, which will be better for the sector,” he told the conference.
Mr George said that it was unlikely that this would apply to LRBAs put in place on or after 1 July 2017. Instead it could be from a later date, such as the date of Assent of the Bill or potentially 1 July 2018. The Explanatory Memorandum to the Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 says that inclusion of LRBAs in the calculation of the Transfer Balance Cap:
…only apply to borrowings arising under contracts entered into on or after 1 July 2017. They do not apply to the refinancing of the outstanding balance of borrowings arising under contracts entered into prior to 1 July 2017, or to contracts that were entered into prior to 1 July 2017 but that complete after that time.
The SMSF Association is holding its Technical Day in Melbourne today, Adelaide on July 25 and Perth July 27. The Sydney and Brisbane Technical Days have already been held.