LRBA changes top adviser attention

2min read

Enquiries about changes to limited recourse borrowing arrangements (LRBAs) have topped adviser queries according to BT Advice Technical’s June quarter round-up.

BT’s Technical Consultant, Tim Howard says the changes impacting SMSF clients with an LRBA are easily the most topical for the quarter he says. The changes can be explained in two parts.

Mr Howard said “The first part relates to combining the outstanding LRBA debt to calculate a client’s total super balance.”

It’s important to note that this measure is proposed at this stage only.

The second part relates to the interaction between LRBAs and the transfer balance cap.

Under this measure SMSF clients will be required to record a credit against their transfer balance account where an LRBA held in retirement phase is repaid from funds held in accumulation phase.

Howard says this measure has broadly been introduced to prevent people transferring funds from accumulation to retirement phase via a loan repayment, in an attempt to circumvent the transfer balance cap.

Mr Howard says “This measure will likely only affect a minority of clients and it’s important to note that existing LRBAs in place prior to 1 July 2017 will not be impacted.

“Due to the level of complexity in these measures, it’s timely to seek expert counsel so clients are aware of the changes. However for now no immediate change is required to client strategies and it’s business as usual, while we await any further consultation” Mr Howard says.

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Information is current as at 02/08/2017.

Nicole Webb
nicole.webb@btfinancialgroup.com
0466 479 673

Lisa Parrett
lisa.parrett@btfinancialgroup.com
0432 933 796

Noelle Waugh
noelle.waugh@btfinancialgroup.com
0466 017 594