An SMSF can borrow from another entity that has also borrowed money as long as each arrangement is kept separate from the other.

SMSFs seeking evidence a related-party LRBA interest rate is on commercial terms should also check the entire borrowing contract falls under the same standard.

SMSF trustees with LRBAs should be reviewing their repayments and investment strategy as borrowing rates increase from 1 July.

SMSF trustees are allowed to employ short-term borrowings in some specific circumstances to satisfy certain financial commitments of a fund.

The move by major banks away from the LRBA lending space was a business decision unrelated to risk, which has rarely been an issue.

Employing an LRBA in an SMSF should not lead to any of the fund members having a negative asset balance.