Question:
Superannuation funds – Instalment Warrants and Limited Recourse Borrowing Arrangements (LRBAs)
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Draft legislation, in respect of the matter which was originally announced by the previous Government in March 2010, has been released. This will clarify the “look through tax treatment” which applies to superannuation investments which have been acquired using a limited recourse borrowing arrangement.
Instalment Warrants and LRBAs are arrangements for assets (usually shares or property) which have been acquired using borrowings, where the security held by the lender is limited to that particular asset.
The assets are usually held on trust until the borrowing is fully repaid. However, for tax purposes, there is a “look through” treatment that treats the asset as having been acquired by the superannuation fund directly.
This legislation will ensure that the present practice is put on a proper legal basis. It will apply to assets that vest in the trust in the 2007/08 and later income years. That means that the provisions will be retrospective in order to align them with the start of provisions allowing superannuation funds to enter into LRBAs.
WTB 2015/73
Treasury Announcement 19 January 2015
Andrew and Tony Lovett
12 February 2015
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