PCG 2016/5 – SMSFs and arm’s length loan terms for related party Limited Recourse Borrowing Arrangements: ATO auditing “safe harbour” terms
The Tax Office on Wed 6.4.2016, issued Practical Compliance Guideline PCG 2016/5 setting out the Commissioner’s “safe harbour” terms on which SMSF trustees may structure related-party LRBAs consistent with an arm’s length dealing. The ATO generally takes the view that a SMSF may derive non-arm’s length income (taxable at 47%) if the terms of a LRBA are not consistent with…