The ATO has recently issued draft SMSF Ruling SMSFR 2011/D1 – Self Managed Superannuation Funds: limited recourse borrowing arrangements – application of key concepts.
This draft ruling explains important concepts about limited recourse borrowing arrangement (LRBA) provisions as they apply to SMSFs. The key concepts explained are:
- what is an ‘acquirable asset’ and a ‘single acquirable asset’
- ‘maintaining’ or ‘repairing’ the acquirable asset as opposed to ‘improving’ it
- when a single acquirable asset is changed to such an extent that it is a different (replacement) asset.
Refer to SMSFR 2011/D1 Self Managed Superannuation Funds: limited recourse borrowing arrangements – application of key concepts, which was published on 14 September 2011.