{"id":1009,"date":"2015-11-18T12:53:23","date_gmt":"2015-11-18T03:23:23","guid":{"rendered":"https:\/\/fwgs.net.au\/?p=1009"},"modified":"2015-11-18T12:53:23","modified_gmt":"2015-11-18T03:23:23","slug":"limited-recourse-borrowing-arrangement-noise-rg146-3","status":"publish","type":"post","link":"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/","title":{"rendered":"Limited Recourse Borrowing Arrangement Noise (RG146)"},"content":{"rendered":"<h4><strong>Part III of III<\/strong><\/h4>\n<p>In the first of a series of three articles James looked at the government\u2019s response to the financial inquiry and surmised it was good news with LRBA\u2019s being left on the table, albeit with a new review scheduled for 2018. In the second article he explained that although the look through provisions are now legislated there is a red flag when planning to conduct improvements to an asset.<\/p>\n<p>In this article he looks at related party loans on non-commercial terms to bring accountant\u2019s seeking a solution to the Accounting exemption expiry up to date.<\/p>\n<h3><strong>Related party loans on non-commercial terms<\/strong><\/h3>\n<p>In 2014 ATO stated that where the loans did not reflect commercial terms, the income derived from the assets purchased under a LRBA would be treated as non-arm\u2019s length income of the SMSF. Non-arm\u2019s length income is taxed at a rate of 47%.<\/p>\n<p>While the Interpretive Decisions apply from the 2014 year of income, no guidance was provided in relation to non-commercial related party loans established before 1 July 2013 \u2013 happy days but wait\u2026<\/p>\n<p>The ATO has since stated that any pre-1 July 2013 loans that have been arranged on non-commercial terms will need to be rectified. The ATO expects that such arrangements should be restructured on commercial terms by 30 June 2016 \u2013 hmm not so happy after all.<\/p>\n<p>Unfortunately some SMSF trustees may have difficulties in complying with this deadline.<\/p>\n<p>For example, if a related party had lent 100% of the purchase price of an asset to the trustees of a SMSF, and the loan to value ratio (LVR) for a similar loan, if arranged on commercial terms was (say) 70%, and the current LVR, even after asset revaluation is (say) 85%, the trustees will need to make a capital repayment to the related party lender in order to reduce the LVR to 70%, by 30 June 2016.<\/p>\n<p>Accountants and Advisers should take steps to contact clients who may be affected as soon as possible so that remedial action may be taken to ensure compliance by 30 June 2016.<\/p>\n<p>Finance Wise Global Securities Pty Ltd (AFSL No: 397877) is Australia\u2019s leading provider of licensing services to Accountants seeking a simple, clear and cost effective solution to transition into the new landscape on July 1<sup>st<\/sup>, 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Part III of III In the first of a series of three articles James looked at the government\u2019s response to the financial inquiry and surmised it was good news with LRBA\u2019s being left on the table, albeit with a new review scheduled for 2018. In the second article he explained that although the look through [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":454,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[19],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Limited Recourse Borrowing Arrangement Noise (RG146) | finance wise<\/title>\n<meta name=\"description\" content=\"finance wise. Our licensing services solution to the removal of the accounting exemption.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Limited Recourse Borrowing Arrangement Noise (RG146) | finance wise\" \/>\n<meta property=\"og:description\" content=\"finance wise. Our licensing services solution to the removal of the accounting exemption.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/\" \/>\n<meta property=\"og:site_name\" content=\"finance wise\" \/>\n<meta property=\"article:published_time\" content=\"2015-11-18T03:23:23+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/fwgs.net.au\/wp-content\/uploads\/2015\/08\/customised-solutions.png\" \/>\n\t<meta property=\"og:image:width\" content=\"450\" \/>\n\t<meta property=\"og:image:height\" content=\"412\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"James Barger-bos\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"James Barger-bos\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/\",\"url\":\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/\",\"name\":\"Limited Recourse Borrowing Arrangement Noise (RG146) | finance wise\",\"isPartOf\":{\"@id\":\"https:\/\/fwgs.net.au\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/fwgs.net.au\/limited-recourse-borrowing-arrangement-noise-rg146-3\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/fwgs.net.au\/wp-content\/uploads\/2015\/08\/customised-solutions.png\",\"datePublished\":\"2015-11-18T03:23:23+00:00\",\"dateModified\":\"2015-11-18T03:23:23+00:00\",\"author\":{\"@id\":\"https:\/\/fwgs.net.au\/#\/schema\/person\/b6aa0ae2e15349b4e8e2ee8d60d97643\"},\"description\":\"finance wise. 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