Deal reached with Greens to get Budget bill over the line
The Australian federal government will ban self-managed superannuation funds (SMSFs) from using limited recourse borrowing arrangements (LRBAs) to purchase residential property, after reaching a deal with the Greens to pass its budget tax legislation through the Senate.
Treasurer Jim Chalmers (pictured) confirmed the change in Canberra on 23 June 2026, saying the measure would "strengthen the rules that limit borrowing by superannuation funds".
The ban applies prospectively – existing SMSF property arrangements will be exempt, and a 45-day transition period will apply for any investments currently in progress at the time the bill receives royal assent.
The LRBA loophole has drawn scrutiny for more than a decade. The 2014 Murray Financial System Inquiry, commissioned by the then-Coalition government, recommended tightening SMSF borrowing rules. The Council of Financial Regulators raised the same concerns in both 2019 and 2022.
Despite that history, the Albanese government flatly rejected an identical Greens demand as recently as last year, making Tuesday's announcement a notable reversal.
Chalmers sought to frame the scale of the change as modest. "This is a very small part of the housing market," he told reporters. "SMSFs, for example, are less than 1% of total residential property borrowing, and less than half a per cent of new residential borrowing each year."
The Greens have also won an eight-week extension to the parliamentary inquiry into National Disability Insurance Scheme reforms, deferring that legislation until at least mid-August 2026.
Shadow Treasurer Tim Wilson was critical of the backdown, describing the budget as being "in complete disarray" and accusing the Greens of "dictating the terms" of the government's fiscal agenda.
A Greens spokesperson said the prospective ban "will take a little bit more heat out of the housing market by reducing demand," arguing it would prevent SMSF holders from outbidding renters and first-home buyers at auction.
The budget tax package, which separately abolishes the Howard government-era 50% capital gains tax discount and replaces it with an inflation-indexed model, is now expected to pass the Senate before the end of next week.
More to come.
