The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 (Cth) was passed and received Royal Assent on 26 June 2026. The new rules commence on 10 August 2026 — 45 days after Royal Assent. For any trustee with a residential LRBA in progress, that is the operative deadline. It’s arguably the most significant change to SMSF borrowing since the Limited Recourse Borrowing Arrangement (LRBA) exception was first introduced, and it directly affects any trustee weighing up, or already using, a residential property strategy inside super.
If you’re a property investor with an SMSF, or considering one as a purchasing structure, here’s what’s actually changing, what’s protected, and what the timeline means for you.
What Is Changing and How Is It Different From an Outright Ban?
Rather than banning LRBAs outright, the amendment narrows the existing borrowing exception in section 67A(2) of the Superannuation Industry (Supervision) Act 1993 (Cth) so that it only applies to “business real property” as defined under the SIS Act. The ATO is the regulator for SMSF compliance under the SIS Act — trustees with compliance questions about how the change applies to their fund should refer to ato.gov.au or seek advice from a licensed SMSF specialist.
In plain terms: your fund can still borrow to hold property, but from commencement, that property generally needs to be business real property. Residential deals are only in scope if they’re contracted before then, refinance an existing loan, or are already grandfathered.
Who Does This Actually Affect?
This isn’t a blanket change for every trustee. Here are the scenarios where it matters most:
Mid-purchase, contract not yet exchanged
Considering a residential purchase
Refinancing an existing SMSF property loan
Business owner eyeing commercial property
Not sure if your SMSF loan or property purchase qualifies for transitional protection? Get a free, no-obligation consultation with a Credit Hub broker today.
Does This Affect Your Existing Arrangement at All?
| Your Arrangement | If Protected / Grandfathered | If Not Contracted by Commencement |
|---|---|---|
| Existing LRBA already in place | ✓ No forced sale or restructure | — |
| Contract signed before 10 August 2026 | ✓ Protected even if settlement is later | ✗ Not automatically covered |
| Refinancing an existing loan | ✓ Generally permitted, any time | — |
| New residential LRBA, no contract yet | — | ✗ Likely misses the window |
| Commercial / business real property | ✓ Unaffected by the change | ✓ Remains fully open |
What's the Timeline Between Now and Commencement?
Confirm where your fund stands today
Check whether you have an existing LRBA, a signed contract, or are still cash-ready with no contract in place. The deadline for contracting is 10 August 2026.
If you're mid-deal, prioritise exchange
Contracts signed and exchanged before commencement are the deciding factor for transitional protection.
If you're refinancing, confirm lender requirements
Ask whether the refinanced facility needs to mirror the original terms, and what documentation will be expected.
If you're considering commercial property, that door stays open
Business real property purchases through an SMSF continue under the existing borrowing exception, with no deadline attached.
Act Now
Before commencement
Narrowed
SIS Act borrowing exception
Grandfathered
Existing LRBAs protected
What Determines Transitional Protection?
Whether a specific deal qualifies comes down to a small number of factors:
Contract Timing
Arrangement Type
Property Type
Settlement Timing
Loan Purpose
Fund Structure
The Bottom Line
This is a real and significant shift, but it isn't the end of property in super. Existing arrangements are protected under the grandfathering provisions, commercial property remains open, and there's still a narrow window to get a residential deal across the line — contracts must be exchanged before 10 August 2026. Note that the stamp duty, settlement, and state revenue consequences of a purchase falling outside the grandfathering window vary by state. Trustees in Victoria, NSW, Queensland, and other jurisdictions should check with their state revenue office or a local legal adviser on how these rules interact with their specific transaction.
Common Questions Before Commencement
Will my existing SMSF loan be forced to change?
No. Existing LRBAs are grandfathered under the legislation. You will not be forced to sell, restructure, or repay early because of this change.
I haven't signed a contract yet, have I missed out?
Can I still refinance my existing SMSF property loan?
Is commercial property through my SMSF affected?
Confirm exactly where your SMSF stands under the new rules. Book a free review with a Credit Hub broker and get clarity before the deadline hits.
General Advice Disclaimer: This article contains general information only and does not constitute financial, legal, or superannuation advice. Your individual circumstances have not been considered. SMSF trustees should seek advice from a licensed financial adviser, a registered SMSF auditor, and a qualified legal practitioner before making any decisions about their fund’s borrowing arrangements. Credit Hub Australia holds an Australian Credit Licence 472959.
