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Forward Thinking Magazine : August 2011
Macquarie Adviser Services 29 Macquarie Adviser Services MAStech Possible structural solutions The core of the problem with real property is the tight LRBA rules around what an LRBA asset is and how it can be dealt with. Interposing an entity such as a unit trust between the LRBA holding trust and the target asset (e.g. the real property) may resolve some of the issues. An interposed unit trust In Figure 1 below, the asset which is the subject of the LRBA is units in the unit trust, not the real LRBA structure with unit trust property. Therefore if improvements are made to the real property, as long as there is no change in the units held by the holding trust, there will be no change in the nature of the asset held by the holding trust. Improvements to the real property could be funded in a number of ways, including the unit trust raising capital by issuing new units at market value, either to the SMSF directly, to the SMSF via a new LRBA, or to some other third party (e.g. a member or related party of the SMSF). Figure 1: Non-super alternatives Legal ownership underlying Asset e.g. real property Holding Trust unit Trust ‘ASSeT’ subject to LRBA is units in the unit trust LeNDer Charge Beneficial Interest SMSF or related party