The SMSF Association has confirmed how the government’s ban on the use of limited recourse borrowing arrangements (LRBA) will apply now the legislation to bring in the measure has passed through both houses of parliament.
The Treasury Laws Amendment (Tax Reform No 1) Bill 2026 received royal ascent on 26 June and will come into effect from 10 August.
In light of this development, the industry body has indicated how the legislation will impact SMSFs currently with an existing LRBA in place.
“Any existing LRBAs, including the refinancing of existing arrangements, and new arrangements entered into before 10 August (including those that settle after) will be grandfathered,” the association said.
“To ensure that any transactions currently in progress will be grandfathered, trustees and advisers will need to ensure that contracts are in place and that all relevant entities, including holding trusts, are correctly established.
“Additional care will be needed during this critical transitional period and those impacted should consider seeking specialist legal advice.”
The association has also issued a reminder to practitioners about Tranche 2 of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regulatory regime set to take effect on 1 July.
It highlighted the activities that will now be captured by the legislation, meaning many SMSF professionals will soon be subjected to new compliance requirements.
These include setting up an SMSF for a client, lodging application forms with the Australian Securities and Investments Commission (ASIC) to register a company or business name, assisting a client to buy or sell a business, including providing documents to ASIC for the transfer of a body corporate, and providing a registered office address for a business client.
“If you provide even one of the new designated services, you must enrol with AUSTRAC (Australian Transaction Reports and Analysis Centre) as a reporting entity and be ready to comply with your statutory obligations from 1 July 2026,” the association indicated.
“This is not optional. Financial penalties may apply for each day your business remains unenrolled.”
It pointed out these AML/CTF requirements for this new cohort of practitioners continue into the future as well.
“From 1 July 2026, captured practices will also have ongoing obligations, including completing customer due diligence before providing a designated service to a client and meeting reporting obligations, such as reporting suspicious activity to AUSTRAC,” it emphasised.
The SMSF Association will be co-hosting the SMSF Trustee Empowerment Day 2026 with smstrusteenews to be held in September. This is a must attend event for your clients. Click here to secure their seats.
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.
Articles by Darin