Greens demand SMSF property borrowing ban

• The Australian Greens demand a ban on self-managed superannuation fund borrowing to support the federal budget.
• The potential policy shift could impact property investments made via limited recourse borrowing arrangements.
• The minor party aims to close a perceived tax loophole before passing the government's budget legislation.

The Australian Greens have demanded that the federal government ban self-managed superannuation funds from borrowing to purchase residential property in exchange for the minor party's crucial Senate budget vote.

This development follows the government's recent decision to delay its A$37.8 billion National Disability Insurance Scheme savings bill until August to secure separate Greens support.

"SMSFs should not be used as a political football to address perceived federal budget risks," said SMSF Association CEO Peter Burgess.

The minor party stated that the restriction is necessary to prevent a surge in tax-sheltered property investments following the government's broader capital gains tax changes.

The government is currently negotiating the terms to ensure the passage of its budget bill by the end of next week.

The proposed ban targets limited recourse borrowing arrangements, which allow superannuation funds to purchase debt-funded assets while protecting other fund holdings from loan defaults.

The federal government previously altered its budget tax policy by lifting the small business capital gains tax discount turnover threshold from $2 million to $10 million.