SMSF borrowing (LRBAs) and how it affects total superannuation balances (TSB)

SMSF borrowing (LRBAs) and how it affects total superannuation balances (TSB)

24 January 2020 Topics: Superannuation, Professional advisers, Tax and revenue

One long outstanding measure that affects members of SMSFs has been including the outstanding borrowings of an SMSF in members’ total superannuation balances. The legislation implementing this has now been passed.

We have written on these proposals before.

The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Act 2019 was passed in September 2019 and received royal assent in October 2019. It contains a number of important changes, including these rules, which apply from 1 July 2018.

The detail

A share of the outstanding amount of a borrowing under an LRBA will be added to an SMSF member’s ‘total superannuation balance’, increasing it beyond the ordinary calculations where:

  • there is an amount outstanding under an LRBA that complies with section 67A;
  • the assets secured by that debt support the member’s superannuation interest; and
  • either:
    • the borrowing is from an ‘associate’; or
    • the member has satisfied one of the retirement, terminal medical condition, permanent incapacity or turning 65 conditions of release.

The result is that part of the outstanding debt under an LRBA is included as an additional amount when calculating a member’s ‘total superannuation balance’.

The amount for a member is that proportion of the outstanding debt that member’s superannuation interest supported by the secured assets bears to all members’ superannuation interests supported by the secured assets.


The rules apply to a borrowing ‘that arises under a contract entered into on or after 1 July 2018’. What this means is not clear (is it the property contract, or the loan agreement?), so caution should be taken for LRBAs from around that time until this is clarified.

A refinancing of a pre-1 July 2018 borrowing does not trigger the new rules. This is defined to be where all of the following are present:

  • the original borrowing arose ‘under a contract entered into before 1 July 2018’
  • the refinancing itself complies with the LRBA rules
  • the refinancing is secured by the same asset
  • the refinanced amount is equal to or less than the amount outstanding under the old borrowing at the time of refinancing.


The proposed measures have a number of potential consequences. Under the new rules a member could find they now have a zero non-concessional cap in circumstances where that was not the case without these rules.

To discuss how you or your clients may be affected by this proposed change, contact a member of our superannuation team.



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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.