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LRBA change will put advisers at risk

Treasury’s last minute proposal to count assets under a limited recourse borrowing arrangement (LRBA) towards an individual’s super balance and transfer balance cap will leave financial advisers exposed to risk if legislated.

“They are putting advisers at risk by introducing such a complex and quite significant change at the eleventh hour, and literally it won’t even become legislation until the week before 30 June if it goes through the whole process,” SMSF Association head of technical Peter Hogan told the SMSF Association NSW Sydney Local Community breakfast event last week.

“But it’s there unfortunately and they haven’t dropped it.

“As an association, we have put across our view [to Treasury] of how this works and how inappropriate it is, because they’ve been aware of this as an issue right back at the start of discussions – it was discussed at the very beginning of what the original legislation should and shouldn’t include and LRBAs were raised.”

Hogan said the association expected the changes to be passed, but with a delayed implementation time.

“As a minimum, that’s what we’re asking for,” he said.

“To include interest as a credit to an individual’s cap is ludicrous.

“The paranoia is simply that you’ll use accumulation assets to pump up your pension asset values. That’s what the government is concerned about.”

LendEx chief executive David Ruddiman told selfmanagedsuper: “We’ve got to wait and see what ultimately comes out because, at the moment, they’re throwing a lot of things on the table but how much of it will actually be implemented?

“There are well-meaning, trusted advisers out there that do the right thing by their clients every single day.

“And we’re seeing those referrals coming through because these advisers have taken the time to go through CPD (continuing professional development)-accredited courses to make sure that they have a level of understanding that at least meets our requirements for them to even make a referral.”

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