This week, the Government announced that it has agreed to support planned changes that would ban new limited recourse borrowing arrangements (LRBAs) used by self‑managed superannuation funds (SMSFs) to buy residential property.
The ban is expected to be implemented 45 days after royal assent however the final commencement date will depend on the passage of legislation and when royal assent occurs.
This is a major development however existing LRBAs should not be affected and any transactions already in progress will have time to be completed before the expected start date in mid‑August 2026.
It is not yet clear at what stage a transaction in progress needs to be before the commencement date, it may not just be limited to a property contract having been signed. So it will be important for SMSFs to progress an existing purchase / loan arrangement as far as possible before the commencement date.
Importantly, the proposed changes are directed at new limited recourse borrowing arrangements used to acquire residential property through self-managed superannuation funds. Based on the information released to date, they do not extend to LRBAs involving commercial property.
The precise scope of the reforms will depend on the final legislation, and further detail is expected once the draft laws are released.