Updated June 2026
The short answer: Grandfathering of an existing SMSF limited recourse borrowing arrangement (LRBA) turns on the contract exchange date — not the settlement date. An arrangement where the contract was exchanged before the new rules commence is generally protected, even if settlement happens afterwards. Commencement is approximately the 45th day after the amending Act receives Royal Assent (Royal Assent occurred in late June 2026, putting commencement around mid-August 2026). If you are mid-transaction, the single most important thing you can do is confirm your exchange date against commencement — precisely, not approximately.
This is the question with the shortest fuse, so let me be exact about the dates that matter and the one most people get wrong.
Key takeaways
- The trigger is contract exchange, not settlement. Funds with a contract exchanged before commencement are generally protected even where settlement falls later.
- Settlement date is the wrong cutoff — and it’s the error people panic over. A deal that exchanged in time but settles after commencement is generally still fine.
- Commencement ≈ 45 days after Royal Assent for the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. With Royal Assent in late June 2026, that points to mid-August 2026 — but treat any single hard date with caution and confirm it.
- Finance approval is not the trigger either. Neither loan pre-approval nor formal approval determines grandfathering — the exchanged contract does.
- Mid-stream arrangements get transitional protection, but the protection is dated and document-specific. Vague “I think we’re fine” is not a position; the exchange date on the contract is.
- Refinancing a pre-commencement LRBA may be preserved, but the ATO had not confirmed (as at June 2026) whether a refinance counts as a new arrangement. Don’t rely on it without checking.
Why exchange, not settlement, is the date that counts
Grandfathering protects arrangements that were genuinely entered into before the law changed — and in property, you enter into the deal at exchange of contracts, when both parties are bound. Settlement, weeks or months later, is the completion of a commitment already made. Specialist commentary on the Bill is consistent on this: acquisitions entered into before commencement are protected, even where settlement occurs after commencement (SMSF Adviser, June 2026).
That distinction is doing quiet damage in the forums right now. Trustees mid-purchase see “ban commences mid-August” and assume that if they can’t settle by then, the deal is dead. For most, that is the wrong fear. If contracts exchanged before commencement, the arrangement is generally grandfathered and can settle afterwards on its existing terms. The panic is real; the premise behind it usually isn’t.
The three dates people confuse — and which one actually governs
Three dates get blurred into one anxious question. Only one governs.
1. Finance approval date. Pre-approval and formal approval feel decisive because that’s where the stress lives. They are not the grandfathering trigger. A fund can hold approval and still be caught if contracts didn’t exchange in time; a fund can have exchanged and be protected while finance is still being finalised.
2. Settlement date. The completion date. It does not determine grandfathering. A protected arrangement can settle after commencement.
3. Contract exchange date. This is the one. Exchange before commencement, and the arrangement is generally grandfathered. The contract — and the date on it — is the document that decides your position.
So the practical instruction is narrow and clear: find your contract, find the exchange date, and compare it to commencement. Everything else is noise until that comparison is made.
What “commencement” actually means here
Commencement is not a round number someone picked. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 commences approximately the 45th day after it receives Royal Assent. The Bill passed both houses on 25 June 2026, with Royal Assent following in late June — which places commencement around mid-August 2026.
A caution worth stating plainly: you will see specific calendar dates quoted as if they were carved into the statute. Treat them carefully. The mechanism is “45 days after Royal Assent,” and the exact day depends on the assent date and any transitional guidance issued since. For a decision this consequential, confirm the current position rather than acting on a number you saw in a headline.
If you’re mid-transaction right now
Here is the sequence that actually protects a position, in order:
1. Locate the contract and confirm the exchange date. Not approval, not the settlement booking — exchange. 2. Compare it to commencement (≈ 45 days after Royal Assent). If exchange predates commencement, you are generally in grandfathered territory. 3. Confirm the arrangement’s documents are consistent — the holding (bare) trust, the LRBA terms, and the security all need to line up with a pre-commencement arrangement. 4. Get the timing confirmed before you act on it. “Probably fine” is not a structure. The dates are decisive, and they reward precision.
A worked example, anonymised: a trustee mid-purchase nearly walked away from an in-train arrangement because they couldn’t settle before the change. On checking the contract, exchange had already occurred — the deal sat inside the grandfathering window and could complete on its existing terms. The value at risk was a viable position abandoned over the wrong date, not any breach.
The cost of acting on the wrong date
Two mistakes cost real money here, and they pull in opposite directions.
The first is giving up too early — abandoning a grandfathered arrangement because you measured against settlement instead of exchange. That surrenders a position the law would have protected.
The second is assuming you’re safe when you’re not — treating a deal as grandfathered when contracts hadn’t actually exchanged before commencement, or when the documents don’t support it. That risks the arrangement and, worse, the fund’s complying status.
Both errors come from the same root: deciding on a half-remembered date instead of the exchange date on the actual contract. When the fuse is this short, precision is the whole strategy.
Frequently asked questions
Is it the exchange date or the settlement date that determines grandfathering?
The contract exchange date. An LRBA where contracts were exchanged before commencement is generally grandfathered, even if settlement occurs after commencement.
When does the 2026 LRBA change commence?
Approximately the 45th day after the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 receives Royal Assent. With Royal Assent in late June 2026, that points to around mid-August 2026 — confirm the exact date rather than relying on a quoted figure.
Does loan approval before commencement protect my arrangement?
No. Finance pre-approval or formal approval is not the grandfathering trigger. The exchanged contract is what counts.
My contract exchanged but we settle after commencement — am I caught?
Generally no. If contracts exchanged before commencement, the arrangement is typically protected and can settle afterwards. The exact facts matter, so confirm them.
Can I refinance my existing SMSF LRBA after the change?
Possibly. Refinancing a pre-commencement arrangement appears to be preserved, but as at June 2026 the ATO had not confirmed whether a refinance is treated as a new arrangement. Treat it as unsettled and check before relying on it.
What should I do first if I’m mid-purchase?
Find the contract, confirm the exchange date, and compare it to commencement. That single comparison decides far more than loan timing — and it should be confirmed, not assumed.
If the clock is running on your deal
This is the one page on the site with a real deadline behind it. Commencement is weeks away, not months, and the date on your contract — not your loan — decides whether your arrangement is protected. Acting on a half-remembered date is the expensive mistake here, in both directions.
The clean next step is narrow: confirm your exchange date against commencement before you assume either way. A structuring conversation does exactly that — you leave knowing whether you’re inside the window or not, and what that means for settlement.
Confirm where your fund stands → book a structuring conversation.
Watching the change rather than caught by it? Join the Healthy Wealthy Investor list and I’ll keep you current as the dates firm up.
This is general information, not personal financial, tax, legal, or credit advice. Your circumstances are specific to you; consider obtaining advice from an appropriately licensed professional before acting.
Juan Jeffery — Strategic Property & SMSF Advisor Credit Representative 464548 · Finsure (Australian Credit Licence 384704)
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