{"id":1344,"date":"2016-01-15T10:38:18","date_gmt":"2016-01-15T01:08:18","guid":{"rendered":"https:\/\/fwgs.net.au\/?p=1344"},"modified":"2016-01-15T10:38:18","modified_gmt":"2016-01-15T01:08:18","slug":"lrbas-a-ticking-time-bomb","status":"publish","type":"post","link":"https:\/\/fwgs.net.au\/lrbas-a-ticking-time-bomb\/","title":{"rendered":"LRBAs a ticking time bomb"},"content":{"rendered":"

LRBAs \u2013 a ticking time bomb for accountants<\/strong><\/p>\n

Banks who regularly hand out money without any documentation are known as charities.<\/p>\n

So when the trustee of an SMSF borrows money from a bank they expect documentation, and a lot of it. Trustees also expect valuations, credit criteria, an application fee and an interest rate that reflects market conditions.<\/p>\n

The ATO obviously know this and are therefore placing a heavy emphasis on appropriate documentation, security, fees and charges to confirm the validity of such borrowing arrangements. \u00a0The ATO has stated that it is \u201cvery concerned\u201d that SMSF trustees are not meeting or aware of certain conditions that would qualify their related-party loan as being on commercial terms. This should make Accountants working in this space take notice.<\/p>\n

Auditors have been communicating the necessity of arms-length arrangements and appropriate interest rates for some time but the ATO is seeking more. Aside from operating an AFSL which accommodates Accountants seeking the best authority solution after the accounting exemption expires, finance wise also operates a credit license and has many years of SMSF borrowing experience.<\/p>\n

To the best of our knowledge there is no such thing as an unsecured loan to SMSF\u2019s and no lender hands out money without documentation.<\/p>\n

It is critical to document the terms of all loan arrangements and to register a mortgage or a caveat.<\/p>\n

The ATO has given the industry time and opportunity to resolve these matters. So all practitioners should be looking at their related-party LRBA loans and ensuring the ATO requirements are followed to the letter.<\/p>\n

If you have any queries regarding the accounting exemption, RG146 training, licensing solutions and software please email admin@financewise.net.au<\/a> and finance wise will assist.<\/p>\n","protected":false},"excerpt":{"rendered":"

LRBAs \u2013 a ticking time bomb for accountants Banks who regularly hand out money without any documentation are known as charities. So when the trustee of an SMSF borrows money from a bank they expect documentation, and a lot of it. Trustees also expect valuations, credit criteria, an application fee and an interest rate that […]<\/p>\n","protected":false},"author":1,"featured_media":788,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"yoast_head":"\nLRBAs a ticking time bomb | finance wise<\/title>\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\/lrbas-a-ticking-time-bomb\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"LRBAs a ticking time bomb | finance wise\" \/>\n<meta property=\"og:description\" content=\"LRBAs \u2013 a ticking time bomb for accountants Banks who regularly hand out money without any documentation are known as charities. So when the trustee of an SMSF borrows money from a bank they expect documentation, and a lot of it. 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