In this year’s Federal Budget, the government announced a number of changes to negative gearing, capital gains tax and discretionary trusts.
The first tranche of the tax changes was passed on 26 June and included a restriction on super funds, ostensibly SMSFs, entering into limited recourse borrowing arrangements over residential real estate from 10 August 2026 – 45 days after the legislation received Royal Assent.

What Still Qualifies?

It is still possible for super funds to continue using LRBAs for residential real estate arrangements already in place and those that are ‘entered into’ up to the commencement of the legislation. The industry has sought clarification on what is required to establish that an arrangement meets the requirement of being in place.

Where The Industry Currently Stands

From what we understand it would appear that LRBA arrangements are considered to be in place if the contract for purchase of the residential property has been signed prior by 9 August 2026. Also, prior to the commencement of the legislation, it should be ensured that the holding trust has been established, the trustee of the holding trust has been appointed and the correct legal structure is in place so the contract can be signed in the correct names. It seems that it is possible for the fund to proceed with and financing arrangements and settlement of the property when the new legislation commences on 10 August.

What’s Next?

We understand that Treasury is currently working with the ATO to provide clarification in response to industry concerns.