Applied Financial Planning
Total superannuation balance and limited recourse borrowing arrangements
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If the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 (Bill) becomes law, an individual member's total superannuation balance (TSB) may be increased by their share of the outstanding balance of a limited recourse borrowing arrangement (LRBA) that commenced on or after 1 July 2018. However, the increase only applies to members:
  • Who have satisfied a relevant condition of release with a nil cashing restriction, or
  • Whose superannuation interests are supported by assets that are subject to an LRBA between the superannuation fund and its associate (often referred to as a 'related party' in everyday conversation).
This article examines the effect of the proposed law on members who have satisfied a relevant condition of release with a nil cashing restriction, and also how it applies to members whose superannuation interests are supported by assets that are subject to an LRBA between the superannuation fund and its associate (often referred to as a 'related party' in everyday conversation).

For completeness, we note that the proposed law applies to both members of self-managed superannuation funds (SMSFs) and other funds with fewer than five members. For the purpose of this article series, we will focus on its application to SMSFs.

Members satisfying a condition of release with nil cashing restrictions

Under the proposed law, the relevant conditions of release with nil cashing restrictions are:

  • Retirement,
  • Terminal medical condition,
  • Permanent incapacity, and
  • Attaining age 65.
Only members who satisfy the relevant condition of release with nil cashing restrictions will have their TSB increased. We illustrate this with an example.

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