LRBA Loan Facility Agreement (Related Party)
This order will generate documents for a related party loan where the SMSF enters into a limited recourse borrowing arrangement (LRBA) to acquire an asset and obtains funding through an associate (e.g. individual, related trust or company).
1. Fund & Trustee details
When ordering the document you can utilise integrations with BGL, Class or SuperMate to populate the order form - it will capture fund and trustee details.
When selecting an address (if not populated via the software integration), you can start typing an address into the field and it will find the correct address for you and store it for the purposes of other address fields within the order form.
Below is an example of where the address can be chosen from the drop menu once selected earlier within the form.
2. Asset & Lender details
The form allows you to choose the type of asset being acquired as a ‘Single Acquirable Asset’ for the purposes of section 67A of the SIS Act.
2.1 - Single Acquirable Asset details
If the asset is ‘property’, you will be required to populate specific information relating to the acquired property asset
NB. The tooltip provides instruction on how to include the property details within the form:
- Where asset is property, show full address - e.g. 350 Collins Street, Melbourne VIC 3000; or Suite 4, Level 7, 350 Collins Street, Melbourne VIC 3000
If the asset is ‘listed shares / units’, you will be required to add a description of the collection of identical assets under the single acquirable asset definition:
NB. The tooltip provides instruction on how to include the listed shares / units details within the form:
- If asset are shares/units, show as a collection of identical assets - e.g. #1,000 ABC shares
If the asset is ‘other’, you will be required to add a description support the definition of the asset being a single acquirable asset:
NB. The tooltip provides instruction on how to include the asset details within the form:
- Include full description of the asset acquired that meets the definition of a single acquirable asset.
2.2 - Lender details
You are required to select the lender details - being individuals or a company, including where they may act in the capacity
Where the lender(s) are individuals (including as trustee), you can add details of the trust, where relevant, along with the number of individuals that act as lenders.
If the lender is a company, you can add details of the company including ACN and whether the company is acting as trustee of a trust - where yes, you will include the trust name as well.
For a company as lender, there are multiple options available to sign the loan facility agreement as per below:
You will also include the registered address of the company lender.
3. Loan Amount & Repayment details
3.1 - Loan details
As part of including the loan start date and loan amount, you can select whether the loan is to comply with the ATO’s ‘safe harbour’ guidance in PCG 2016/5, https://www.ato.gov.au/law/view.htm?DocID=COG/PCG20165/NAT/ATO/00001
Where you select ‘Yes’, it will populate the current interest rate within the safe harbour guidance along with other relevant details that need to be completed.
This includes where the initial term is ‘fixed’ (rather than variable), a 5 year limit will populate in accordance with the safe harbour. Based upon the loan repayment date (completion of loan), the form will automatically calculate the loan term (in years).
A range of tooltips have been added within these questions that link to the ATO’s safe harbour requirements.
3.2 - Repayment details
To work out the loan repayments, we have included a calculator within the order form for you to complete the calculation - simply click on the link for a pop-up to appear to use the calculator.
The calculator allows you to fill in the key details of the loan to determine the monthly repayments.
You can ‘copy and paste’ the repayment numbers from the table into an Excel spreadsheet or Google Sheet for you to track repayments as part of an audit workpaper.
You can then transpose the repayment details back into the order form.
Prior to submitting the order, you can review the details before submitting.
As a Create document subscription member, the document can be submitted and an order will be deducted from the counter. For PAYG orders, you will need to make payment by credit card as part of submitting the order.
4. Completed order
Once the order is completed, the following documents are generated:
- LRBA Loan Facility Agreement
- Trustee Minutes
- Notice of Loan Facility Agreement
- Drawdown notice for advance from loan facility
Should the interest rate change under the ATO’s safe harbour you can order the ‘Notice to vary Interest Rate’ form from the Smarter SMSF platform.