The government has acquiesced to the Greens’ demand to ban the use of limited recourse borrowing arrangements (LRBA) by SMSFs to purchase residential property in order to have the federal budget passed in the Senate.
“The government has agreed to support an amendment that will be moved by the Greens to ban future limited recourse borrowing arrangements for residential property by superannuation funds,” Prime Minister Anthony Albanese said this morning.
“Superannuation funds are generally prohibited from borrowing money to invest, with the exception of LRBAs that are used by SMSFs.
“Multiple inquiries have raised concerns that these arrangements raise risks for superannuation investors, including the 2014 Murray financial system inquiry conducted for the coalition, and limiting new arrangements going forward will help protect people’s savings.
“These arrangements constitute less than 1 per cent of total residential property borrowing and less than half a per cent of new residential borrowing each year.
“These changes don’t in any way change the tax arrangements for superannuation, don’t impact any existing SMSF borrowing arrangements and provide time to finalise arrangements that are in train.”
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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