Bare trust timing isn’t just a detail — it’s a dealbreaker. Here’s how to get it right the first time.
First Things First: What’s a Bare Trust and LRBA?
What is a Bare Trust?
A bare trust (also known as a holding trust) is a simple trust where the trustee holds an asset without discretion—they simply hold it on behalf of the SMSF, which is the beneficial owner.
When an SMSF borrows money to buy property, the law requires that the property is held in a separate trust (the bare trust) until the loan is repaid. This structure ensures the property is isolated from other fund assets and complies with SMSF borrowing rules.
Think of the bare trust as a legal “parking bay” for your property until your SMSF finishes paying off the loan.
What is an LRBA?
A Limited Recourse Borrowing Arrangement (LRBA) is a loan structure that allows your SMSF to borrow money to purchase a single asset—most commonly property—using only that asset as security.
The “limited recourse” part is key. If your SMSF defaults on the loan, the lender’s rights are limited to the property. They can’t touch any other assets in the fund. This is what keeps your members’ retirement savings protected.
Why Do You Need Both?
You need an LRBA because SMSFs are generally prohibited from borrowing money—unless it’s under a structure like this.
You need a bare trust to legally hold the property while the loan is being paid down.
You need to get the timing and naming right to ensure the arrangement is valid, compliant, and doesn’t trigger unnecessary stamp duty.
When Should You Date the Bare Trust Deed?
Here’s a quick reference guide to when your bare trust deed should be executed in each Australian state and territory:
| State/Territory | When to Execute the Bare Trust Deed | Stamp Duty Risk |
|---|---|---|
| Queensland (QLD) | Before or on the same day as signing the contract | Risk of double duty if deed is late |
| New South Wales (NSW) | After signing the property contract | Must not pre-date the contract |
| Victoria (VIC) | After contract date but before settlement | Timing critical to avoid extra duty |
| Tasmania (TAS) | After contract date | Standard post-contract requirement |
| South Australia (SA) | After contract date but before settlement | Timing critical to avoid extra duty |
| Western Australia (WA) | Before or on the contract date | Avoid post-dating |
| Australian Capital Territory | After contract date | Standard post-contract requirement |
| Northern Territory (NT) | Before signing the contract | Pre-date required |
Queensland and the NT are the outliers—here, the deed must be executed before or on the contract date. Most other states require it after.
How Should the Bare Trust Be Named?
The naming convention used in your bare trust deed can vary slightly depending on the jurisdiction. This might seem like a small detail, but it’s crucial for getting the documentation right—especially when it comes to stamp duty assessments, lender approvals, and ensuring compliance.
Below is an example table illustrating how the bare trust (also known as the holding trust) might be named in each jurisdiction. These examples assume you have a corporate trustee—adjust the details to suit your actual entities (e.g., replace “ACN XXX XXX XXX” with your company’s ACN, or insert the actual trust name):
| Jurisdiction | Bare Trust (Borrowings) |
|---|---|
| NSW | Holding Trustee Pty Ltd ACN XXX XXX XXX |
| VIC | Holding Trustee Pty Ltd ACN XXX XXX XXX |
| QLD | Holding Trustee Pty Ltd ACN XXX XXX XXX as trustee for Name of Holding Trust |
| SA | Holding Trustee Pty Ltd ACN XXX XXX XXX |
| TAS | Holding Trustee Pty Ltd ACN XXX XXX XXX |
| WA | Holding Trustee Pty Ltd ACN XXX XXX XXX as trustee for the Name of Holding Trust — or — Holding Trustee Pty Ltd ACN XXX XXX XXX as trustee for the Name of Holding Trust for the SMSF Trustee Pty Ltd ACN XXX XXX XXX as trustee for Name of Fund |
| ACT | Holding Trustee Pty Ltd ACN XXX XXX XXX |
| NT | Holding Trustee Pty Ltd ACN XXX XXX XXX as trustee for Name of Holding Trust as bare trustee for SMSF Trustee Pty Ltd ACN XXX XXX XXX as trustee for Name of Fund ABN XX XXX XXX XXX |
Tip: Always check with your SMSF administrator, accountant, or legal adviser to ensure the naming convention suits your specific structure and complies with local requirements.
LRBA Refresher: How It Works (in 3 Steps)
- The SMSF borrows money through an LRBA to purchase a property.
- A bare trust is set up to legally hold the property while the loan is repaid.
- Once the loan is fully repaid, legal ownership is transferred to the SMSF.
This structure protects your fund, complies with superannuation laws, and allows you to invest in property without dipping into your personal savings.
Ready to Set Up a Bare Trust & LRBA?
We’re here to guide you through every step — without the confusion, the compliance headaches, or the costly errors.
SMSF House – making super work, so you don’t have to.
Disclaimer
The information contained in this article is provided for general information purposes only and does not constitute legal, financial, or taxation advice. While SMSF House are SMSF specialists, the content is intended to be educational in nature and should not be relied upon as a substitute for tailored advice specific to your personal or financial circumstances.
Stamp duty legislation, trust deed execution requirements, and naming conventions vary between Australian states and territories and are subject to change. Although every effort has been made to ensure the information presented is accurate and current at the time of publication, SMSF House accepts no responsibility or liability for any errors, omissions, or consequences arising from reliance on this information.
We strongly recommend that you obtain independent professional advice from a qualified solicitor or licensed financial adviser prior to establishing a bare trust, entering into a Limited Recourse Borrowing Arrangement (LRBA), or making any investment-related decisions that fall outside the scope of advice permitted to be provided by an accountant.
SMSF House is a registered accounting firm and does not provide financial product advice as defined under the Corporations Act 2001.