Understanding the Single Acquirable Asset Rule Under LRBA

News | Mehak Gaba | Released: 18/06/2025 | Read: 3 Mins

The concept of a "Single Acquirable Asset" (SAA) is crucial when your SMSF enters into a Limited Recourse Borrowing Arrangement (LRBA). The ATO Ruling SMSFR 2012/1 provides much-needed clarity on what counts as a single asset for borrowing purposes, especially since the SIS Act doesn’t provide a concrete definition.

As a general rule “one legal title” is treated as a “separate acquirable asset” and “Single LRBA” is required per asset. Accordingly, each asset must be acquired under its own LRBA, which requires a separate loan agreement and a distinct bare trust structure.

However, there are many revenue instances, especially in property matters, where multiple titles have been regarded as a single property for the revenue purpose.

ATO Ruling SMSFR 2012/1 Different approaches to determine Single Acquirable Asset

Usage - The term 'single acquirable asset' should be interpreted from a 'usage perspective' and not from a 'title perspective.

🌾 Farming business is being run across several land titles

• Consider, If a farming business is being run across several land titles, it may still be considered a single acquirable asset.
• In this case, the word "asset" isn’t just about the number of legal titles — it's about how the land is being used.

 ✅ ATO View (Based on SMSFR 2012/1 Principles):

So, if all the land titles are being used together as one farming property, they can be treated as one single asset for borrowing purposes, even though they’re legally separate.

Investment Decision- When deciding whether something is a single acquirable asset, don’t just look at the number of legal titles or physical parts. Instead, focus on the investment decision itself. If the asset even if made up of several parts was acquired as one integrated investment, and all parts are essential to how it works, then it should be treated as “one single acquirable asset” under an LRBA.

🏡 Vineyard with Separate Land Titles

Consider an SMSF wants to purchase a vineyard business. The vineyard is spread across three adjoining land parcels, each with its own legal title:

·  Title 1 – contains the grapevines.

·  Title 2 – contains the irrigation infrastructure and storage sheds.

·  Title 3 – contains the processing facility and access road.

✅ ATO View (Based on SMSFR 2012/1 Principles):

Even though there are three legal titles, the investment is in a single operating vineyard where all parts are essential to the functioning of the business. So, this may be considered a single acquirable asset,

Law of a State or Territory: When asset may not identical but If state law mandates that assets must be sold together as one So, they should be treated as a “single asset” for borrowing purposes.

🅰️ Apartment and Car Park with Legal Restrictions

Consider an apartment and the apartment has associated car parking, each on separate titles But, If state law mandates they must be sold together they are treated as a “single acquirable asset” for LRBA purposes.

Contractually tied together: Contractually tied together, meaning they must be bought, sold, or used as one unit—not separately. This kind of "tying together" happens because of an agreement, not because the law says they have to be joined.

🔗 Stapled Securities

Imagine there's a share in a company and a unit in a property trust, and they're "stapled" together. You can't buy or sell one without the other—they come as a package. So, if an SMSF wants to buy this stapled package using a loan, the question is: Is this one asset or two?

✅ ATO View (Based on SMSFR 2012/1 Principles):

According to borrowing rules, if it's seen as two separate assets, You’d need two LRBAs—one for each asset.

📌 Final Word: Understanding the ATO’s Approach

Visit www.trustdeed.com.au for more details or call us on(02) 9684 4199

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