SMSF borrowing and business real property: what Schedule 5 changed

Schedule 5 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 commences on 10 August 2026 and amends the definition of “acquirable asset” in section 67A(2) of the Superannuation Industry (Supervision) Act 1993: for an asset that is real property, the asset must be business real property within the meaning of section 66 of that Act. It applies only to arrangements entered into on or after 10 August 2026 — arrangements entered into before that date are outside the amendment, and the Schedule contains no divestment requirement, no forced sale and no sunset date.

Key points:
- Schedule 5 is **law**. It was part of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49 of 2026), which received Royal Assent on 26 June 2026. Schedule 5 commences on the 45th day after assent — **10 August 2026**.
- It amends **section 67A(2)** of the SIS Act — the definition of *acquirable asset* — by adding: “for an asset that is real property — the asset is business real property (within the meaning of section 66 of this Act)”. It does not amend section 67B, and it adds no new condition to the section 67A(1) exception itself.
- The test is the date the **arrangement was entered into**, not an income year, not the drawdown date and not settlement. It applies only to arrangements **entered into on or after 10 August 2026**.
- Arrangements entered into **before** 10 August 2026 are outside the amendment entirely. Item 2(2) separately carves out — but only **to the extent that** they do so — an arrangement that maintains or refinances a borrowing under a pre-commencement arrangement, and an acquisition that happens under a pre-commencement arrangement, **even if settlement happens after** that date. Those words “to the extent that” are a real limit: the Act does not resolve how far the carve-out reaches where a refinance increases, restructures or consolidates the borrowing.
- There is **no divestment provision, no forced sale, no unwinding requirement and no sunset date** anywhere in Schedule 5. Nothing in it requires an existing SMSF loan to be repaid or an existing property to be sold.
- It does **not** stop an SMSF acquiring real property **without borrowing**. Schedule 5 amends only the definition feeding the [limited recourse borrowing](/technical-resources/glossary#lrba) exception — not the sole purpose test, not the section 66 related-party acquisition rules, and not the in-house asset rules.
- Only **real property** is affected. Shares, units and other non-real-property acquirable assets are untouched by Schedule 5.
- “Business real property” is a **technical defined term** in section 66(5), turning on real property used wholly and exclusively in one or more businesses. It is **not** a synonym for “commercial property”, and whether a particular property qualifies is fact-specific.