28/04/2016

It’s about 2 months away from the 30 June 2016 deadline the ATO has set in relation to fixing any non-arm’s length related party loans advanced for limited recourse borrowing arrangements.

Here’s how we can help trustee/s of SMSFs meet that deadline.

The first question to ask is whether there is a loan agreement in place documenting the terms of loan to the SMSF?  If the answer is no, we can assist by providing loan documentation including the necessary security such as a mortgage over real property which should then be registered with the relevant state’s titles office. 

If there is a loan agreement in place already, does the agreement allow for the terms to be varied?  Don’t worry if it doesn’t. We can still help.

Should formal loan documents be prepared to vary the terms of the loan, or are trustee/s minutes and resolutions enough?

Section 109 of the Superannuation Industry (Supervision) Act 1993 requires related parties to deal at arm’s length with each other.  Would a commercial lender such as a bank allow the terms of the loan to be varied by trustee/s minutes?

What terms should be inserted?  Will you go with the so-called ‘safe harbour’ terms or do you have evidence of more advantageous terms in the market that he fund can make use of?

As the loan terms must apply for the whole year, does the fund have enough money to pay additional interest for that period?

No matter what the situation, whether the trustee/s need:

• to understand their obligations more completely;
• to document and confirm a previous loan;
• to vary the terms of a current loan;
• to have a mortgage prepared;
• help implementing any of the changes or new documents including registering a loan variation,

contact our office on (02) 8296 6222 or info@townsendslaw.com.au to see how we can assist.  It’s not too late yet, but time is ticking away and deadlines always come up sooner than expected!