Missing Mortgage Data Hides Impact of SMSF Tax Changes

Missing data around Self-Managed Super Funds may explain the gap between industry and Treasury estimates of the impact of government tax changes. The Urban Developer can reveal that the number of SMSFs entering into debt arrangements to invest in housing may be unknown, with no government agency responsible for collecting that information in real time. Treasury modelling estimates that about 4000 new loans are written in that class annually, while industry stakeholders suggest removing that vehicle will result in up to 400,000 fewer houses over the Housing Accord period. When announcing a forthcoming ban on the use of Limited Recourse Borrowing Arrangements in June, as an amendment to the tax changes within the Commonwealth Budget, the government relied on that Treasury modelling based on ATO data. Explaining the changes to Parliament on Wednesday, June 25, finance minister Katy Gallagher said her understanding was that “buyers of about 4000 properties per year, a very small percentage of the residential market, utilise limited recourse borrowing arrangements”. “And I should say, SMSFs are still able to purchase residential properties. The change here is that they can’t borrow to purchase residential properties,” Gallagher said. Data lags and gaps in investment vehicles LRBAs, which limit the ability of lenders to recourse solely against the asset involved, are accessible only to SMSFs. As such, data on LRBAs is gathered solely by the ATO, via self-reported tax returns each financial year. Unlike other mortgage or lending products, which are covered by APRA or other financial regulators, the data comes from the borrower. Some reporting coverage of LRBA products may be available in patches from state land title registries, commercial credit rating agencies, or other private entities. However, the big banks have not offered LRBAs for almost a decade, meaning the sector is largely serviced by secondary and alternative lenders who may have different reporting obligations. LRBA products are also not split from other mortgages in non-ATO financial reporting datasets. ▲ New builds have retained tax advantages in the Budget’s changes, but not for LRBA products. An ATO spokesperson told The Urban Developer that “while financial institutions and other lenders will have visibility of LRBAs they finance, we are not aware of any other centralised reporting of LRBA data”. Time lags also exist between the date of writing the LRBA contract, its reporting and the publication of ATO data. The spokesperson told The Urban Developer that “the data is sourced from information reported by SMSFs through their annual returns”. “As a result, LRBA data is only available after funds lodge their annual returns.” The ATO publishes datasets covering SMSFs on a quarterly and annual basis. In the March 2026 quarter, the total value of LRBAs extant was about $80.4 billion, up from $72.2 billion a year prior. However, the most recent annual report covers the 2023-24 financial year. In that year, 11.5 per cent of SMSFs held a LRBA. That includes the 8.3 per cent holding LRBAs covering Australian residential property, with a median value of $651,764. The remaining 3.2 per cent held non-Australian or commercial property, or shares or other assets. Data covering the 2024-25 financial year is expected to be released later this year or early next. ▲ The split between LRBAs going to new or established housing is among many missing data points. While ATO data may be used to infer the growth in the number of SMSFs using LRBAs each year, the number of LRBAs which have rolled off is not published, demonstrating only net gain and not new LRBAs. The ATO data also does not show the split between LRBAs associated with established and new housing. The ATO spokesperson told The Urban Developer that data available “includes data on the proportion of SMSFs with LRBAs, asset allocation and LRBA asset holdings in the SMSF Statistical Overview, as well as quarterly and annual asset allocation data in the SMSF Quarterly and Annual Statistics publications”. Treasury relied on the ATO’s data when modelling its estimate of around 4000 LRBAs per year. On June 24, a Senate motion ordering the release of that Treasury modelling, led by opposition housing minister Andrew Bragg, was voted down. It remains unclear what ATO data was used by Treasury, or what modelling was applied to interpret it. Treasury declined to release the modelling to The Urban Developer , or to comment for this story. Industry estimates of impact much higher An industry roundtable held in Canberra by Bragg on July 1 heard from lenders, property developers, and real estate agents, among other stakeholders. Attendees discussed that compounding effects of the changes, in particular due to LRBAs providing pre-sale commitments to new housing developments, may make projects infeasible without their support. Bragg is now placing himself at the forefront of an industry push to have new housing exempted from the changes. Bragg told The Urban Developer that Treasury says “some 4000 to 4500 homes each year would be affected. This is a terrible number in itself.” “It means the government has effectively admitted that the Budget will, by design, lead to at least 75,000 fewer homes over the next decade (including the impact of CGT and negative gearing, along with Labor’s dodgy deal with the Greens to kick SMSFs out of housing). “But industry says it will be even worse.” ▲ Senator Andrew Bragg is pushing for new builds to be exempted from the ban on residential LRBAs. According to Bragg, his push for Treasury to reveal its modelling was voted down by Labor and the Greens to “protect their big-super vested interests [rather] than tell Australians the truth about the impact on housing supply”. “I will continue pursuing the release of these documents in full, without the redaction of any figures or underlying assumptions. The public needs to know. Australians deserve better.” Colliers project marketing director Ashley Bramich, who attended the roundtable, told The Urban Developer that in addition to the data lag through self-reporting, “the ATO data also relies on settled properties”. With development cycles of two or three years, and growth in the take-up of SMSFs, Bramich estimates that ATO data may not capture a sharp growth in recent years of new LRBAs from around 4000 to around 10,000 annually. That figure of 10,000, according to Bramich, more accurately reflects conversations with industry players specialising in developments targeted to that market. While developers and lenders may not report LRBAs, SMSF buyers are visible to them through contracts, and few of those buyers are settling in cash. “This is something every day I’ve got visibility and transparency over,” Bramich says. ▲ LRBA investors are targeting sub-$1 million homes in new developments, Bramich said. “Developers dealing in $2- and $3- and $4- and $5-million properties will be ringing me and saying, Ashley, you’re off the rail here, mate. We don’t have SMSF sales. “But at the coalface, we know across projects that are sub-$1 million, these are your mums and dads that have got $200,000 to $800,000 in their super. And these are the ones that are actually taking advantage of being able to use LRBAs to be able to set themselves up for the future.” Bramich says that the majority of developments with sub-$1 million homes will have at least 30 per cent of pre-sales attributed to SMSFs. “These sales are a critical component of helping developers in Australia go to banks and get funding, so that they can start construction,” Bramich says. ▲ Substantial gaps in LRBA data mean questions over their impact will remain unsolved. “So, what’s the multiplier effect if these sales aren’t there? That would then restrict developers from proceeding and getting funding and delivering.” As a result, Bramich says, the final impact may be as high as 40,000 fewer new homes each year, or 400,000 homes over the Housing Accord period. Other industry stakeholders have put forward their own analysis. UDIA national president Oscar Stanley has suggested that 6000 homes will be removed from the pipeline, with a compounding impact of 13,500 in total each year. Those figures are based on UDIA analysis of ABS construction commencements data. However, without up-to-date, centralised data on LRBAs, or visibility of Treasury modelling, the actual impact of the tax changes remains opaque.

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Patrick Lau
Fri 17 Jul 26

Missing Mortgage Data Hides Impact of SMSF Tax Changes

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