iscoverWith Labor grappling with a huge federal budget deficit and a housing market under pressure, SMSF borrowing may be seen as an easy target, a specialist documentation provider warns.
LRBAs tipped as potential target in upcoming federal budget
13 September 2022
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5 minute read
Speaking to SMSF Adviser, LightYear Docs director Grant Abbott said SMSF loans are one area of super that could potentially be hit by surprise measures in the federal budget next month with Labor currently dealing with a significant budget deficit and looking for tax savings.
Mr Abbott noted that in the lead-up to 2019 election won by the Coalition, Labor made it clear it would look to review and potentially ban limited recourse borrowing arrangements for SMSFs for the purchase of property.
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Labor proposed the ban on direct borrowing by SMSFs back in 2017 as part of a housing affordability package.
While Jim Chalmers previously flagged earlier this year that Labor would not be proceeding with previous policies from the 2019 election such as the franking credit changes, he has also stressed the need to tackle the huge deficit and address the shortage of housing.
Mr Abbott said he “wouldn’t be surprised” if a proposal to ban SMSF loans pops up again in the upcoming October federal budget.
“There’s a lot of arguments they could potentially raise for it,” said Mr Abbott.
“Number one is that [it’s] a good tax saving for them. On the other side of that they could say that SMSFs have been pulling investment properties out that could be used for first home buyers.
“My gut feel is that we are pretty close to seeing some major changes for SMSFs and that the first one is going to be borrowing.”
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