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SMSF Updates

Interaction between Division 7A and COVID-19 LRBA repayment relief

01 Apr, 2021

The ATO have published guidance on the interaction between COVID-19 limited recourse borrowing arrangements (LRBA) repayment relief and Division 7A.

This LRBA guidance applies if a self-managed superannuation fund (SMSF) has:

  • an LRBA from a related private company where Division 7A applies; and
  • the fund has negotiated repayment relief with the lender on commercial terms as a result of the financial impacts of COVID- 19.
The new guidance helps SMSF trustees determine how to avoid the application of non-arm’s length income (NALI) rules, especially if unpaid interest has not been capitalised on the loan during the payment deferral period.
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