The 23 June SMSF Decision: What Actually Changed, and What Didn’t

Today, the Government and the Greens reached an agreement that will ban Self-Managed Super Funds from using Limited Recourse Borrowing Arrangements to acquire residential property. The change is the price of getting Labor’s broader tax legislation — the negative gearing and CGT reforms announced in the May budget — through the Senate.

The news is being reported in dramatic terms. We’ve spent the last six hours on the phone with our SMSF clients and our accountant network, and we think a calmer summary is in order.

What changed

One thing changed. New LRBAs inside SMSFs, used to purchase residential property, will be banned 45 days after the legislation receives royal assent. The bill is expected to pass the Senate before parliament rises on 2 July 2026. Royal assent typically follows within days. The effective ban date is therefore around mid-August 2026.

What did not change

Four things did not change, and they’re worth listing in order of how often they’re being misunderstood today.

Existing SMSF property loans are completely grandfathered. If you already have an LRBA in place for a residential property inside your SMSF, today’s announcement has zero impact on you. The change is prospective only. You don’t need to do anything, sell anything, or restructure anything.

Commercial property LRBAs are unaffected. The ban applies to residential property only. If your SMSF holds commercial property — an office, a retail unit, a warehouse, or business real property used by a member’s business — or if you were considering buying one through an LRBA, the rules haven’t changed. This category is now disproportionately strategic.

The SMSF tax structure is unchanged. Earnings inside an SMSF in accumulation phase remain taxed at 15%. In pension phase, the rate remains 0%. The one-third CGT discount on assets held longer than 12 months has been preserved. SMSFs continue to be one of the most tax-effective investment vehicles available in Australia.

And the most overlooked point of all: after the May budget changes, an SMSF is now the only legal structure in which an Australian can purchase an existing residential property and still negatively gear it. Personal names, family trusts, and company structures are now restricted to new builds only. SMSFs are not. That hasn’t been reported widely, but it’s the most consequential point in this entire announcement.

The 45-day window

The 45-day transition rule is the focus of the next 7–8 weeks for anyone considering an SMSF residential purchase. Here’s how it works in practice. Once the bill receives royal assent, anyone with an SMSF residential LRBA already in progress has 45 days to complete the contract exchange. If contracts are exchanged before that date, the deal is treated as grandfathered and proceeds under the existing rules. After that date, no new residential LRBAs will be permitted inside SMSFs.

What “in progress” means in practice is being clarified, but the consensus among SMSF specialists today is that the contract date is the trigger. If you’re considering a residential SMSF purchase and you can exchange contracts in the next 6–7 weeks, you preserve all your current options.

What this is not

This is not the end of property in your SMSF. The narrative that “SMSF property is over” is wrong. What’s ending is the ability to borrow to acquire residential property inside an SMSF, starting in mid-August. That’s a narrower change than the headlines suggest.

What it means, practically:

• Existing SMSF property continues to operate as it does today.
• Commercial property in SMSF remains a viable, tax-effective strategy.
• Cash purchases of residential property inside SMSF are completely unaffected.
• New SMSF setups can still hold property — just not residential property funded by an LRBA after the cut-off.

What to do this week

If you have an SMSF and you hold property: do nothing different. Confirm with your accountant that your existing arrangements are grandfathered, then return to your scheduled programming.

If you have an SMSF and you were considering a residential property purchase: get in touch with your broker, your accountant, and your property strategist this week. Map your timeline. If you can exchange contracts before the ban commences, your purchase proceeds under the current rules.

If you don’t have an SMSF and you were considering one specifically to invest in residential property via an LRBA: the pathway closes in mid-August. If you can complete fund establishment and contract exchange in that window, you preserve your options. If you can’t, the conversation shifts to commercial property, cash purchases inside SMSF, or new builds outside SMSF.

If you’d prefer a private 30-minute strategy call, that link is here.

This article is general in nature and does not constitute financial, taxation, legal, or investment advice. SMSF decisions involve interactions between superannuation law, tax law, and property strategy. We always work alongside your accountant and licensed financial planner — please consult them before acting on anything in this article.