Govt defers LRBA decision
The government has postponed any legislation decision regarding the treatment of outstanding loan balances on limited recourse borrowing arrangements.
The proposal was specifically excluded from the Treasury Laws Amendment (2017 Measures No.2) Bill 2017 tabled in parliament on 25th May.
Treasury has indicated it will undertake further industry consultation on this proposal before any further action is taken.
The SMSF Association said it supports the move for more consultation to ensure SMSFs can continue to use LRBAs as a legitimate retirement savings strategy.
LRBA treatment contained in the bill was the requirements from 1 July 2017 to record a total super balance credit from any principal and interest paid for this sort of liability against an asset held in retirement phase from funds held in accumulation phase.
This treatment will only apply for LRBAs entered into after 1 July 2017 and will not capture refinancing activities for the outstanding balance of an LRBA or contracts entered into before this date.
Amended treatment of transition to retirement income streams (TRIS) where a holder satisfies a nil condition of release was also included in the bill. To this end a TRIS will be classified as a pension in retirement phase and will automatically qualify for the tax exemption on earnings when the TRIS holder turns 65.
Members will have to notify the super fund trustees in regard to claiming the tax exemption for TRIS income earnings for other satisfied conditions of release.
In addition all TRIS arrangements will now be eligible for CGT relief.