No plans whatsoever to change LRBAs, says Treasurer Morrison

Treasurer Scott Morrison has said the Government has no plans whatsoever to change the rules around SMSF Limited Recourse Borrowing Arrangements (LRBAs).

“We’re not touching the arrangements around limited recourse borrowing arrangements,” the Treasurer told the SMSF2017 Summit & Investment Expo.

Morrison noted the recommendation of the Financial System Inquiry to return to a ban on most forms of borrowing by SMSFs.

“That was the recommendation made to us, we haven’t been convinced there is an issue with this when it come to the SMSF sector, as a proportion of the investment property sector and the property sector more generally, it is quite small,” said the Treasurer.

“Obviously, if we thought there was malfeasance there or there was issue there which were creating problems more generally in the economy then we’d have a look at it, but there’s no evidence that has been presented to us to suggest that so the Turnbull Government has no plans whatsoever to change those arrangements.”

Though the Government has recently made some indirect changes to LRBAs, and plans to make further changes. Legislation to include LRBAs in the calculation of the Transfer Balance Cap recently passed the Parliament. The Treasury is also consulting on plans to include LRBAs in calculating the Total Superannuation Balance. Some have said that these measures may be an attempt to effectively ban borrowing by SMSFs.

“We know that the Labor Party does, they want to strip those LBRA arrangements away from self-managed super funds,” Morrison told the expo.

“The whole point of self-managed super is to have more options and be able to acquire assets and to provide for your future.”

“What we prefer to do, is rather than get rid of negative gearing or things like that which our opponents in the Labor Party want to do, we’ve used the macro-prudential measures through APRA, which really can be demonstrated by what we are seeing, particularly in recent times, to be having the desired effect.”

“And we will continue to take a very careful approach when it comes to the housing market. Why is that? No one wins from a hard landing in the housing market. Absolutely no one wins from a hard landing in housing.”

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