(AUSTRALIA) — Millions of Australians with self-managed superannuation funds face a new prohibition on borrowing to buy residential property, under an agreement reached between Labor and the Greens on 23 June 2026.

The new superannuation ban targets limited recourse borrowing arrangements, the structural mechanism that allows SMSFs to take out loans secured against assets held in a separate trust. Under the deal struck between the Albanese government and the Greens, SMSFs would be barred from entering new LRBAs to acquire residential property. Existing arrangements remain untouched.

The change forms part of broader tax reform negotiations that also include adjustments to capital gains tax discounts and negative gearing. Prime Minister Anthony Albanese confirmed on 23 June 2026 that the changes “don’t in any way change the tax arrangements for superannuation” and “don’t impact any existing SMSF borrowing arrangements.”

Self-managed superannuation funds are widely used by small investors and business owners across Australia. Property investment inside SMSFs has been a common strategy, allowing trustees to use retirement balances to acquire real estate through borrowed funds.

The government and Greens are framing the ban as closing a loophole that enabled tax-driven property speculation inside the concessionally taxed superannuation environment.

The agreement clears the way for the Senate to pass the broader tax package. Industry commentary on 23 June 2026 noted that the proposal would end new SMSF property borrowing, but the exact legislative text and commencement timing still depend on Parliament’s final passage of the enabling legislation.

The prohibition applies specifically to residential property. Commercial property, including business real property used by a related party, remains outside the scope of the ban. SMSFs can continue to establish new LRBAs for commercial premises, a structure commonly used by business owners who operate from premises owned by their fund.

Existing LRBAs receive full grandfather protection under the announced deal. Trustees with current borrowing arrangements can continue to hold, manage, and eventually sell the property within the LRBA structure. Refinancing of existing LRBAs is expected to remain available, though the precise refinancing rules will be confirmed in the final legislation.

SMSF trustees planning new residential property acquisitions face a closing window. Any new LRBA established before the legislation commences would fall under the pre-ban rules. Trustees considering a new borrowing arrangement should treat the legislation’s passage date as a hard deadline.

⚠️ Warning: The ban has not yet taken effect. The commencement date depends on final passage through Parliament. Establishing a new LRBA after commencement for residential property could breach SIS Act requirements and trigger significant penalties.

Two related superannuation changes are already locked in and take effect from the start of the 2026-27 financial year. From 1 July 2026, employers must pay superannuation at the same time as wages and salaries under the Payday Super regime. This replaces the current quarterly payment system and affects every employer in Australia.

The Australian Taxation Office has confirmed the concessional contributions cap for the 2026-27 financial year is $32,500. This cap limits the amount of before-tax contributions an individual can make to superannuation annually, including employer contributions, salary sacrifice, and personal deductible contributions.

These changes interact in practical ways. Payday Super increases the frequency of employer contributions flowing into fund accounts, which may accelerate the accumulation of funds available for investment. The higher concessional cap provides additional room for members to make tax-effective contributions before the end of the financial year.

Migrants and visa holders who have established SMSFs operate under the same rules as all other trustees. Expatriates returning to Australia, skilled migrants on permanent visas, and temporary residents with superannuation balances are equally subject to the residential borrowing ban once enacted. Visa status does not create an exemption from the SIS Act restrictions.

Trustee Actions

Trustees of self-managed superannuation funds should take several steps now. Review any planned residential property acquisitions that depend on borrowing. If a new LRBA is in progress, confirm the timeline against the legislation’s expected passage.

Consult the fund’s financial adviser and accountant about alternative strategies, including cash purchases or commercial property LRBAs. Members with existing LRBAs need take no action, but trustees should document the current arrangement for audit purposes.

📅 Deadline Alert: The enabling legislation has not yet passed Parliament. SMSF trustees with pending residential property purchases relying on an LRBA should seek professional advice immediately, as the commencement date could follow quickly after passage.

⚠️ Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Tax situations vary based on individual circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.