Share on LinkedInShare on LinkedIn

ARTICLE · 12 APRIL 2016

Safe harbour rules for SMSF borrowing (LRBAs) – are your clients sinking?

Cooper Grace Ward
Cooper Grace Ward
Contributor
Cooper Grace Ward

Cooper Grace Ward

Cooper Grace Ward was established in 1980 and has quickly become one of the largest independent...

View firm profile
Explore more from Cooper Grace Ward

PCG 2016/5 provides guidance on arm's length terms for related party loans with LRBAs and contains safe harbour terms.

AustraliaFinance and Banking
Scott Hay-Bartlem
Scott Hay-Bartlem
Author LinkedIn connections

One of the major issues with LRBAs has been around the terms of loans from related parties.

While the ATO had been making comments, there remained some doubt around what would be considered arm's length terms for related party loans with LRBAs. The ATO has now released PCG 2016/5 to provide guidance on this. It contains safe harbour terms that the ATO will accept are arm's length, which means the income from the LRBA will not be considered non-arm's length income to the SMSF purely because of the terms of the borrowing.

What are the safe harbour rules?


When must the LRBA comply by?

The safe harbour rules apply both to existing LRBAs and those established from now on.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

Australia's Enhanced Substantial Holding Disclosure And Beneficial Ownership Disclosure Regime Comes Into Effect From 4 December

Australian financial markets face a fundamental shift in disclosure requirements from December 2026, as new rules expand substantial holding obligations beyond traditional voting interests to capture derivative positions and economic exposure. Market participants must now navigate complex calculations involving physically settleable derivatives, cash-settled instruments, and offsetting short positions—with no grandfathering for existing holdings.
AustraliaFinance and Banking
K&L Gates
K&L Gates
Article

New Payment Models Face A Broader Licensing Regime

Australia's payment services landscape is undergoing a fundamental regulatory transformation with the introduction of new legislation that shifts focus from specific technologies to the functions and activities performed by payment service providers. The Treasury Laws Amendment Bill 2026 will replace the existing non-cash payment facility framework with a comprehensive licensing regime that distinguishes between payment products and payment services, potentially capturing previously unregulated payment
AustraliaFinance and Banking
McCabes
McCabes
Article

Australia's Updated Financial Innovation Strategy

The Australian Government has unveiled its Financial Innovation Strategy, introducing a new Financial Innovation Committee and overhauling the Enhanced Regulatory Sandbox framework to better support emerging businesses testing innovative financial products. The strategy encompasses reforms across consumer data rights, digital assets, tokenised infrastructure, and regulatory frameworks designed to position Australia as a leader in financial innovation.
AustraliaFinance and Banking
K&L Gates
K&L Gates
Article

First Right To Disconnect Rulings Clarify The Bar For A Contravention Of The Right To Disconnect Laws

In the first substantive rulings on Australia's right to disconnect laws, the South Australian Employment Tribunal has determined that an Adelaide hairdressing salon did not breach its apprentices' rights despite sending frequent out-of-hours messages via TikTok and Snapchat. The Tribunal drew a critical distinction between unwelcome communication and actually preventing employees from disconnecting, establishing that subjective pressure without demonstrable consequences does not constitute a breach.
AustraliaEmployment and HR
Cooper Grace Ward
Cooper Grace Ward
Video

It Depends – Can A Limited Recourse Borrowing Trust Acquire More Than One Asset? (Video)

Under Australian superannuation law, limited recourse borrowing arrangements typically require separate bare trusts for each asset acquired by an SMSF. However, certain exceptions allow multiple assets to be held in a single bare trust, including identical assets purchased simultaneously, permanent fixtures spanning multiple titles, and assets legally required to be dealt with together. Understanding these nuanced rules is critical to avoid serious compliance, tax, and duty implications.
AustraliaWealth Management
Cooper Grace Ward
Cooper Grace Ward
Article

Attempt Is Enough: Record Personal Penalty Signals ACCC’s Zero Tolerance For Cartel Conduct

The Federal Court has imposed a record $1 million personal fine on an executive for attempting to induce competitors into cartel arrangements in the oil and gas services industry, despite all five attempts failing. The Court also issued a non-indemnification order preventing the executive from using insurance or company funds to pay the penalty, marking a significant escalation in competition law enforcement.
AustraliaAntitrust/Competition Law
Cooper Grace Ward
Cooper Grace Ward