The Australian Taxation Office (ATO) has recently issued the following Interpretative Decisions (ID) concerning related party non – commercial limited recourse borrowing arrangements for the acquisition of shares and real property.
•    ATO ID 2015/27 Income tax:  non arm’s length income – related party non-commercial limited recourse borrowing arrangement to acquire listed shares

•    ATO ID 2015/28 Income tax:  non arm’s length income – related party non-commercial limited recourse borrowing arrangement to acquire real property

The ID states how the well established Non arm’s length Income provisions may also apply to Non – commercial limited recourse borrowing arrangements.

The ATO have asked that all Trustees of SMSF review the Limited recourse borrowing arrangements LRBA of their funds and ensure that they are compliant, i.e., put on a commercial footing by 30 June 2016.  If they can’t be placed on a commercial footing they should be closed down.

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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