Tax Confirmation for SMSF Borrowers

[MikeF]

The ATO has announced it will treat a SMSF trustee who enters into a limited recourse borrowing arrangement for the purpose of purchasing an asset as the owner of the asset for income tax purposes.

The proposed measure effectively ignores the instalment warrant trust for income tax purposes and ensures there is no capital gains tax (CGT) event at the time of the last instalment.

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00260483.htm

 

[Kris_Evolved]

Thanks Mike

It is good that the ATO has finally formalised this issue - however they have always commented that it would be the case.

The ATO has been very busy recently in regards to providing a lot of positive clarifications in the form of interpretive decisions relating to the SMSF borrowing rules:

- Borrowing on terms favourable to the SMSF
- Refinancing
- Third party guarantees
- Joint investors
- Capitalisation of interest
- Charges

A brief summary of each of these interpretive decisions can be found here:
http://www.evolvemysuper.com.au/smsf-news/ato-provides-further-guidance-on-smsf-borrowing-rules/

Investors still need to be careful to ensure that they (and their advisors) correctly structure their SMSF purchase otherwise they could face double state based stamp duty - even if there are no CGT consequences.

 

[agent007]

The ATO has announced it will treat a SMSF trustee who enters into a limited recourse borrowing arrangement for the purpose of purchasing an asset as the owner of the asset for income tax purposes.

The proposed measure effectively ignores the instalment warrant trust for income tax purposes and ensures there is no capital gains tax (CGT) event at the time of the last instalment.

http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00260483.htm

Thanks Mike! This remove a worry I had.