LRBA unwinding pack and implementation service

Price:  $825* - unwinding pack | $595 implementation service + disbursements

^{* As the requirements of the QLD Titles Office involve the preparation of additional documents, our unwinding documents service for properties located in QLD will attract an extra fee of $110.00 (incl. GST) per property (note this is to be added to the fee chargeable per additional property).}

Since its introduction, Limited Recourse Borrowing Arrangements (LRBA) have assisted many Australians to buy real property in their SMSF.

Once a super fund’s limited recourse loan is repaid the fund may wish to wind up the arrangement.

Effective 24 September 2007 the fund’s interest in the holding (bare) trust does not become an in‑house asset merely because the loan has been repaid.

Therefore as the loan comes to an end there are three choices for the super fund to consider:

• the super fund leaves the property in the holding trust;
• the holding trustee sells the property to a third party at the direction of the super fund; or
• the holding trust is wound up and the property is transferred to the super fund trustee (winding up).

Unwinding involves transferring the property under the arrangement from the holding trustee (otherwise referred to as bare trustee or custodian) to the fund trustee after the loan has been repaid in full.

While an SMSF may comply with the superannuation laws without unwinding an LRBA there are obvious benefits to doing so.

Transferring the property to the fund trustee provides more flexibility with changing or improving the property, and there are less ongoing administration and professional fees associated with maintaining a corporate holding trustee.

The look through tax treatment also means that there are no adverse CGT consequences from transferring the property to the fund trustee, as the current taxation laws treat LRBAs as if the holding trust did not exist (ie. the assets held by the holding trustee are deemed to be held by the fund trustee).

While an unwinding transaction will incur costs to the fund including legal and other professional fees plus relevant government charges associated with transfer of land. If it can be supported with evidence that the transaction was properly structured and implemented, the fund will be eligible for a concession or exemption on the stamp duty payable on the transfer (depending on the location of the property).

Collating the required evidence for the concession and exemption can prove more difficult with the passage of time so we recommend fund trustees arrange an unwinding process as soon as possible once the loan has been repaid.

Stamping

If the holding trust deed has not been stamped we will need to prepare our stamp duty documents package to apply for concessional duty on this document.

If the holding trust deed was prepared by SUPERCentral the fee is $550 incl GST or $880 incl GST If the holding trust deed was not prepared by SUPERCentral (unless the property is located in QLD or the ACT).

Implementation Service

$595 incl. GST per property (plus disbursements). Further fees will apply if more than 1 property is being transferred.

Our implementation service includes lodgement of all relevant documents with both the duties and titles offices, as well as responding to any standard requisitions raised by either office.

We offer an end-to-end unwinding and implementation service to advisers and private clients for further information please send us an enquiry or call our office on 02 8296 6266