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Have recently accepted an Audit Assignment with the fund having a related party LRBA as part of the purchase of some farming land. The structure of the LRBA is OK, however the "annual payment" of the Loan Principal & Annual Interest cost have been via 2 journal entries with the corresponding entry being treated as NCC ie there has not been any cash change hands. There is no reference or agreement as to any Debt Forgiveness as per provisions contained in TR 2010/1. Any suggestions as to how best treat this. Under TR 2010/1 could the Interest be forgiven as well the Principal? Thankyou
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As Trustees of the SMSF, I supposed the can always passed a trustees resolution to forgive the principal and interest. The interest forgiven would have accounted thereon and 15% calculated, so it should not be an issue with the tax office.