‘Welcome surprise’ for accountants in fresh super changes
The explanatory memorandum for the non-arm’s length income provisions provides important clarification on whether NALI applies where accountants complete the accounts for their own SMSF, says an industry lawyer.
Up until Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 was introduced into Parliament late last month, DBA Lawyers director Daniel Butler said there has been a lack of guidance in regards to whether an accountant doing the books of account for their own fund would lead to the risk of non-arm’s length income (NALI) being applied.
Previously there was some uncertainty as to whether an accountant undertaking their own accounts for their own SMSF would be considered to be NALI given this meant they were saving money on accounting costs, he explained.
The explanatory memorandum materials, however, confirm that the non-arm’s length income rules do not apply “in respect of superannuation entity’s arrangements that are purely internal”.
“This is because an entity’s internal functions are not undertaken with another party on any terms, non-arm’s length or otherwise,” the explanatory memorandum states.
The materials also provide an example of an SMSF trustee undertaking bookkeeping activities for no charge in performing their trustee duties.
“Such internal arrangements are outside of the scope of the non-arm’s length income rules as they do not constitute a scheme between parties dealing with one another on a non‑arm’s length basis, the EM states.
Mr Butler said this clarification in the EM is a “welcome surprise” and clarifies that Treasury does not consider this activity to be an NALI risk.
“It provides some comfort for practitioners who previously considered that too uncertain or uncharted waters,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.