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SMSF Q&A: LRBAs & ATO Safe Harbour

 

Last week saw the ATO provide an extension of time through to 31 January 2017 for SMSF trustees to have their existing related-party LRBA loans comply with terms that would demonstrate an arm’s length dealing for income tax purposes.  This may be demonstrated by falling into line with the safe harbour guidance provided within Practical Compliance Guidelines, PCG 2016/5 or alternatively where the trustee(s) can externally benchmark to terms that would present an arm’s length (commercial) arrangement.

Our recent webinar on the topic raised a significant number of questions about what trustees need to consider between now and 31 January 2017 in light of PCG 2016/5.

In this week’s Facebook live “SMSF Q&A”, I answer many of the questions from the webinar, along with questions from those who joined me for the Facebook live session.  In this 30 minute Q&A, I discuss a range of issues from PCG 2016/5 including, how to meet the safe harbour requirements, issues of refinancing, and the application of the non-arm’s length income (NALI) provisions.

With the ATO expected to provide further guidance around the issues in PCG 2016/5 before 30 September, I will continue to follow this issue closely and provide regular updates through my blog.

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