{"id":"F2014L00396","name":"Self Managed Superannuation Funds (Limited Recourse Borrowing Arrangements – In-House Asset Exclusion) Determination 2014","slug":"self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":128510,"registerId":"commonwealth-F2014L00396-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Self Managed Superannuation Funds (Limited Recourse Borrowing Arrangements – In-House Asset Exclusion) Determination 2014","content":"Legislative Instrument\n\nSelf Managed Superannuation Funds (Limited Recourse Borrowing Arrangements – In-house Asset Exclusion) Determination 2014\n\nI, Alison Lendon, Deputy Commissioner of Taxation, make this determination under paragraph 71(1)(f) of the Superannuation Industry (Supervision) Act 1993\n\nDated: 4 April 2014\n\nAlison Lendon\n\nDeputy Commissioner of Taxation\n\n1.  Name of Determination\n\nThis determination is the Self Managed Superannuation Funds (Limited Recourse Borrowing Arrangements – In-house Asset Exclusion) Determination 2014.\n\n2. Commencement\n\nThis determination is taken to have commenced on 24 September 2007.\n\n3. Determination\n\n3.1. An asset (the investment asset) of a self managed superannuation fund (the fund) that is an investment in a related trust of the fund, is not an in‑house asset of the fund at a time (the test time) where:\n\n(a) the application of subsection 71(8) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) would result in the investment asset not being an in-house asset of the fund at the test time but for the fact that:\n\n(i) if a borrowing referred to in paragraph 71(8)(b) of the SIS Act has not yet begun – such a borrowing has not yet begun; and\n\n(ii) the related trust does not yet hold the asset referred to in paragraph 71(8)(c) of the SIS Act; and\n\n(b) it is reasonable to conclude at the test time that:\n\n(i) if a borrowing referred to in paragraph 71(8)(b) of the SIS Act has not yet begun – such a borrowing will occur; and\n\n(ii) the related trust will hold the asset referred to in paragraph 71(8)(c) of the SIS Act; and\n\n(iii) the application of subsection 71(8) of the SIS Act would result in the investment asset not being an in-house asset of the fund from the time the related trust begins to hold the asset referred to in paragraph 71(8)(c) of the SIS Act.\n\n3.2. An asset (the investment asset) of a self managed superannuation fund (the fund) that is an investment in a related trust of the fund, is not an in‑house asset of the fund at a time (the test time) where:\n\n(a) the application of subsection 71(8) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) resulted in the investment asset not being an in-house asset of the fund at all times from when the related trust began to hold the asset referred to in paragraph 71(8)(c) of the SIS Act until a borrowing referred to in paragraph 71(8)(b) of the SIS Act was repaid; and\n\n(b) the application of subsection 71(8) of the SIS Act would result in the investment asset not being an in-house asset of the fund at the test time but for the fact that that borrowing has been repaid.\n\n4. Definitions\n\nExpressions used in this determination have the same meaning as in the SIS Act.","sortOrder":0}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":6,"scope_assessment":{"changed":false,"description":"This determination performs exactly the function intended by paragraph 71(1)(f) of the SIS Act—providing specific exclusions for limited recourse borrowing arrangements. It addresses the narrow technical gap between setting up an LRBA structure and the actual commencement of borrowing, plus the post-repayment phase. The scope remains tightly confined to its original purpose of facilitating compliant SMSF borrowing without expanding into broader superannuation investment rules."},"complexity_factors":["Heavy reliance on cross-references to subsection 71(8) of the SIS Act without reproducing that text, requiring readers to consult primary legislation","Nested conditional logic with multiple 'but for' clauses creating counterfactual scenarios","Dual temporal frameworks (pre-acquisition phase and post-repayment phase) with different tests for each","Subjective reasonableness test ('reasonable to conclude') requiring predictive judgment about future events","Technical terminology assumes familiarity with SMSF limited recourse borrowing arrangements, bare trusts, and in-house asset concepts","Circular referencing between paragraphs 3.1 and 3.2 and the underlying SIS Act provisions"],"plain_english_summary":"This determination protects common SMSF limited recourse borrowing arrangements (LRBAs) by excluding the SMSF’s interest in the related bare/custodian trust from “in‑house asset” treatment in two cases: where the LRBA structure is in place before borrowing and acquisition (if it’s reasonable to expect compliance), and where the arrangement had qualified during the loan and the loan is later repaid. It affects SMSF trustees and advisers, preventing inadvertent breaches of the 5% in‑house cap and harsh tax penalties."},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":true,"description":"Yes. The determination narrows the circumstances in which an investment in a related trust is treated as an in‑house asset for the purposes of limited‑recourse borrowing arrangements by creating explicit timing- and condition-based exclusions (see clauses 3.1–3.2). It adds forward‑looking and post‑repayment exceptions to the baseline application of subsection 71(8) and applies retrospectively from 24 September 2007 (clause 2)."},"complexity_factors":["Interplay with subsection 71(8) of the SIS Act creates a conditional exclusion (clauses 3.1–3.2).","Forward‑looking 'reasonable to conclude' factual test requires predictive evidence/assessment (clause 3.1(b)).","Multiple timing states are relevant: borrowing not yet begun, related trust not yet holding asset, borrowing repaid, and the single 'test time' concept (clauses 3.1(a)–(b), 3.2).","Dependence on facts about related trusts and specific limited‑recourse borrowings increases evidentiary and compliance burden for trustees (clauses 3.1–3.2).","Retroactive commencement to 24 September 2007 creates potential retrospective effect for past arrangements (clause 2).","Definitions and meaning rely on terms in the SIS Act, requiring cross‑reference to that Act (clause 4).","Administrative application and verification rest with the Commissioner/Deputy Commissioner as maker of the instrument, implying regulatory oversight."],"plain_english_summary":"This determination treats an SMSF’s investment in a related trust as not being an \"in‑house asset\" for the limited‑recourse borrowing rules where subsection 71(8) of the SIS Act would otherwise apply, but either (a) the borrowing or the trust’s acquisition of the asset has not yet occurred and it is reasonable to conclude they will, or (b) the borrowing was in place but has since been repaid. It operates from 24 September 2007. Trustees must meet timing conditions and a \"reasonable to conclude\" test to rely on the exclusion."}},"importantCases":[],"_links":{"self":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d","history":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d/history","analysis":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d/analysis","conflicts":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d/conflicts","importantCases":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d/important-cases","documents":"/api/acts/self-managed-superannuation-funds-limited-recourse-borrowing-arrangements-in-house-asset-exclusion-d/documents"}}