Understanding Invoicing and Outgoings Under an SMSF LRBA Structure

By Shaun McCheane

When an SMSF acquires property via a Limited Recourse Borrowing Arrangement (LRBA), one of the first practical issues trustees encounter is this: Why are invoices and notices addressed to the custodian rather than the fund?

This isn’t an error — it reflects the underlying legal structure.

Under an LRBA, the custodian (bare trustee) holds legal title, and as a result, rates notices, land tax assessments, insurance renewals and utility invoices will typically be issued in the custodian’s name. That is how the property is recorded on title.

However, the SMSF remains the beneficial owner, and with that comes the financial responsibility for the property’s ongoing costs. The custodian’s role is purely administrative. Provided the SMSF maintains proper records showing the expenses relate to the LRBA asset, the fund can pay invoices addressed to the custodian without any compliance concern.

This “look‑through” treatment extends to GST as well. Where an SMSF is registered for GST, it may claim eligible input tax credits on property‑related expenses even when the invoice is issued to the custodian, as the custodian acts solely on the fund’s behalf.

Before Anything Is Paid — Check the Lease

Not all property expenses are the SMSF’s to bear.

Outgoings such as rates, insurance or maintenance may be recoverable from the tenant, depending on the lease terms. In many cases, the tenant should receive those invoices directly.

Overlooking this step can create:

• incorrect allocation of deductible expenses

• GST misclaims

• breaches of lease arrangements

• avoidable compliance issues for the SMSF

A simple lease review is often all that’s needed to keep the fund on the right side of both tax law and superannuation regulations.

Our Role at WE SMSF

Complex structures don’t need to be confusing.

At WE SMSF, our job is to ensure trustees, advisers and business owners understand exactly how LRBA arrangements operate in practice — so property ownership within an SMSF remains compliant, well-documented and strategically effective.

If you or your clients are managing an LRBA, holding business real property inside an SMSF, or simply want clearer guidance on obligations, we’re here to help.

This is the right time to have the right conversation.

Contact Us

📞 1300 459 101

📧 Shaun McCheane — shaun@wesmsmf.com.au

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