The ATO has issued a private binding ruling which provides information on potential tax implications that can occur with limited recourse borrowing arrangements in an SMSF.
The private ruling relates to an SMSF borrowing 100% of an asset’s value on an interest free, related party loan. In the circumstances set out in the ruling, it was found the parties were not dealing at arms length and as a result the fund would receive more income than would have been the case if they were dealing at arms length. [...]