Understanding Bare Trusts in SMSF Borrowing and its stamping requirements.
In August 2025, the Reserve Bank of Australia (RBA) reduced the official cash rate to 3.6%, marking its third rate cut of the year, reducing borrowing costs and encouraging property investment. With interest rates falling and property markets showing strong growth. SMSF trustees are increasingly looking to acquire investment properties through Limited Recourse Borrowing Arrangements (LRBAs).
When an SMSF borrows to acquire property under a Limited Recourse Borrowing Arrangement (LRBA), it must use a Bare Trust — also known as a Custodian Trust, Asset Acquisition Trust, or Debt Instalment Trust.
What is a Bare Trust?
- The Bare Trustee holds legal title to the property.
- The SMSF retains beneficial ownership and receives all income and capital gains.
- The loan is repaid by the SMSF, not the Bare Trustee.
- Once repaid, legal title transfers to the SMSF.
- Each property requires its own Bare Trust.
Tips for setting up a Bare Trust correctly
✅ Good Practices:
- Have the bare trust deed prepared and ready, before signing the contract (especially in QLD, WA, NT).
- Use separate corporate trustees for the SMSF and Bare Trust.
- Ensure your SMSF deed allows borrowing under an LRBA.
- Sign contracts in the Bare Trustee’s name only.
- Maintain clear records: trust deeds, bank statements, loan agreements, and meeting minutes.
🚫 Common Pitfalls:
- Using the same entity as trustee for both SMSF and Bare Trust.
- Signing contracts before the Bare Trust is created.
- Poorly drafted documents can lead to stamp duty issues or non-compliance.
Bare Trust stamping requirements by state
|
State/Territory |
Duty Payable |
Lodgment Required |
|---|---|---|
|
NSW |
✅ Yes ($750) |
✅ Yes via OSR agent |
|
VIC |
❌ No |
✅ Yes via SRO agent |
|
NT |
✅ Yes ($5) |
✅ Yes (post/in-person) |
|
QLD, SA, ACT, TAS, WA |
❌ No |
❌ Not required |
Patricia Holdings can help with setting up Bare Trust deed and stamping
We provide premium, fully compliant Bare Trust deed preparation tailored to SMSF borrowing arrangements. As authorised stamping agents with NSW OSR and VIC SRO, we can help you with trust deed stamping seamlessly across both jurisdictions. Contact us today to enquire about our bare trust deed and stamping service.
