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The next 2 months may be the last golden opportunity for LRBA

20/04/2018

The Government is proposing the introduction of new measures that will impact all Limited Recourse Borrowing Arrangements (LRBA), entered into or after 1 July 2018.  These measures, if enacted, will include a member's share of any outstanding LRBA debt in the calculation of their total superannuation balance, which may have a flow-on effect on that member’s ability to make contributions, including catch-up contributions.

While these measures may be modified or even not enacted, clients who are currently considering entering into an LRBA may see the benefit of making the jump and, ideally settle, before 30 June 2018, to minimise the risk of being caught.

Matters will be a little more complicated for off the plan purchases - as there is no drawdown of the loan until the property is close to completion - which may be in one or two years' time. While at the moment there is no exception available for this type of transaction, the consultation paper does raise the possibility of transitional rules being instated for LRBAs, which straddle 1 July 2018.

More to come once the legislation has been enacted during the Budget session next month.   However, in the meantime, if you do have questions, please get in touch with us on (02) 8296 6266.