SMSF LRBA Safe Harbour Rates for 2025–26: What You Need to Know

If your Self-Managed Super Fund (SMSF) has a related-party Limited Recourse Borrowing Arrangement (LRBA), staying compliant with the ATO’s safe harbour guidelines is crucial. The Australian Taxation Office (ATO) recently announced updated safe harbour interest rates for the 2025–26 financial year, and they’ve dropped slightly from the previous year.

What Are the New ATO Safe Harbour Rates for 2025–26?

The ATO’s safe harbour interest rates apply to related-party LRBAs to help ensure the loan terms are on an arm’s length basis. For the 2025–26 financial year, the safe harbour interest rates are:

• 8.95% for LRBAs used to acquire real property (down from 9.35% in 2024–25)

• 10.95% for LRBAs used to acquire listed securities (down from 11.35% in 2024–25)

These rates are based on the Reserve Bank of Australia’s Indicator Lending Rates for banks providing standard variable housing loans for investors and margin lending.

Why the Safe Harbour Rates Matter

Using the ATO’s safe harbour interest rates can help SMSF trustees avoid potential compliance issues under the Non-Arm’s Length Income (NALI) rules. If your SMSF is borrowing from a related party and not using these benchmark rates, you must be able to demonstrate that the loan is conducted on commercial terms. Otherwise, your SMSF could be subject to significant tax penalties under the NALI provisions.

Review Your LRBA Terms Now

With these rate changes, it’s a good time to:

• Review and update your existing related-party LRBA agreements

• Recalculate interest and loan repayments to align with the new 2025–26 rates

• Ensure amortisation schedules remain compliant and commercially reasonable

Need Help With Your SMSF LRBA?

If your SMSF has a related-party LRBA that needs to be reviewed, updated, or recalculated, we’re here to help. Our team specialises in SMSF compliance, and we can guide you through:

• Updating LRBA documentation

• Ensuring your loan terms align with ATO expectations

• Minimising your risk of breaching NALI rules

📞 Contact us today to make sure your SMSF stays compliant for the 2025–26 financial year.