From 1 July 2025, the benchmark interest rate for Limited Recourse Borrowing Arrangements (LRBAs) will decrease slightly to 8.95% for the 2025-26 financial year. This marks the first reduction in several years and reflects a modest easing in broader market rates.
At TAG, we’ve already started contacting clients with updated loan repayment schedules to reflect this change.
What This Means for You
For many of our SMSF clients, this is a welcome shift. While the rate is still historically high, the small drop gives you the opportunity to redirect that slight interest saving back into paying off your loan even faster.
We’re seeing most clients in a strong liquidity position, so rather than easing repayments, many are opting to accelerate repayments, effectively paying themselves back faster and strengthening their fund’s long-term position.
A Quick Recap: Why the LRBA Rate Matters
If your SMSF has borrowed under a related-party LRBA, the interest rate must align with ATO guidelines to ensure it remains on commercial terms. Each financial year, the rate is adjusted in line with market movements. Staying on top of these changes helps:
- Keep your fund compliant
- Optimise your repayment strategy
- Maintain the long-term sustainability of your investment
Need Help Reviewing Your Strategy?
If you’re unsure how this change impacts your fund or want to explore repayment strategies, we’re here to help. The super experts at TAG works with both trustees and their accountants to ensure borrowing arrangements remain compliant and aligned with broader retirement goals.
Let’s make your super work smarter.
Reach out to your TAG adviser or contact us to review your fund’s borrowing and repayment strategy for the year ahead. Email super@tagfinancial.com.au
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2025. Please do not reproduce without the expressed written consent of the author.