SMSF measures awaiting royal assent

Treasury Laws Amendment (2018 Superannuation Measures No.1) Bill 2019 was passed by parliament on 19 September and now awaits royal assent.

Once the bill becomes law it will impact how some self-managed super funds (SMSFs) report limited recourse borrowing arrangements (LRBAs) and non-arm's length income (NALI), from the 2018–19 financial year onwards.

The explanatory memorandum to the bill underlines that its aim is to ensure complying superannuation entities cannot circumvent the non-arm’s length income rules by entering into schemes involving non-arm’s length expenditure. 

Additionally, measures in the bill set out that the outstanding balance of a limited recourse borrowing arrangement, that is entered into by the trustee of a regulated superannuation fund that is an SMSF or that has less than five members, can in certain circumstances be include within an individual's total superannuation balance. 

As a result of these changes, an individual member’s total superannuation balance may be increased by the share of the outstanding balance of a limited recourse borrowing arrangement, commenced after 1 July 2018.

Furthermore, the bill gives an option to high-income earners with multiple employers to opt out of super guarantee contributions for part of their employment.

According to the explanatory memorandum, combined, these measures are expected to increase revenue by $33 million over the 2018–19 budget forward estimates period.

The Tax Office has notified that until the bill receives royal assent, individuals should continue to report information as instructed in the existing 2019 SMSF annual return.