Speaking to SMSF Adviser, ATO assistant commissioner Dana Fleming said the regulator was currently considering options to practically administer the general expense rules contained in the NALI legislation, but it did not consider there were any systemic issues around financial services professionals providing basic services to their own funds for reduced or no costs.
“The consultation finishes on 15 November, so we have got quite a few good submissions around what we might do, and I am looking for a solution about how we can practically deal with that issue,” Ms Fleming said.
“I think what I can assure the industry is that we are not looking to dedicate compliance resources to administering general expenses — I don’t see that as a risk area for the SMSF sector and that was not the reason the legislation was introduced.”
Ms Fleming said the ATO understood the distinction between discretionary and operational expenses within a self-managed fund.
“General expenses by their nature are usually not discretionary; they are things you have to do to run your fund, like get your accounting done, use a platform provider administration fee or get your actuarial certificate,” she said.
“So, what we need to find is a practical administrative solution as to how we can give some comfort to individuals that provide those services, that they are not going to end up in an ATO audit.”
She added that the ATO was open to industry suggestions around a potential solution that was easy to communicate to practitioners while following the intent of the legislation.
“I am hoping the industry might come up with some good ideas through the submission process, which was one of the reasons we decided to go to consultation without a solution necessarily, because sometimes other people can come up with a better idea than you,” Ms Fleming said.
“We will have to work out which is the easiest to implement because that’s probably my number one priority — what is the simplest for people to understand and therefore for us to implement.
“We need to find a way to take the noise out of this for the industry, because it’s not what we’re interested in. We need to let people be focused on the real issues like illegal early release, promoters, lodging your returns on time — the really important stuff.”
NOT GOOD ENOUGH !!! NALI Expenses – When facing a potential penalty of top marginal rate on all income and capital gains (compared to our virtually zero tax) the suggestion that the ATO will not persue penalties that have just been introduced is NOT a suitable “resolution” for SMSFs, accountants, advisors, auditors etc.
Did your SMSF get part of the bulk buy discount on your SMSF software ? Is that allowed ?
Did you use the Android 7 or better phone provided by the firm to log in to your SMSF software ?
Is that allowed ?
Go straight to jail – Do not pass GO – Pay a $80,000 penalty ?
Who thought this was a good idea ?
FIX THE LEGISLATION ASAP !
There is nothing wrong with the legislation. It is ATO’s interpretation that is completely off the mark. The legislation requires a nexus between deriving the income and the expense incurred. That is actually sensible. What is not sensible is ATO’s interpretation that admin functions in an SMSF have a nexus with deriving that income. To suggest that an SMSF derived income because (that is the meaning of nexus,one is rerquired for the other!) an accountant made entries or lodged a return is such an absurdity that I am lost for words. Wish it were true: I would be very rich indeed!
Wonderful. Get Parliament to pass stupid legislation and worry about how to administer it later while ignoring it in the meantime. This is the rule of law?
So in reality (NALI and expenses) ) this was the answer to a question that no reasonable person would have asked.
Hey ATO and Pollies, how about correct the Legislation you bureaucratic bumbling buffoons. So many stupid rushed legislative stuff ups that then require further add on fixes. Get it right to start with and do the bloody consultation pre the legislation. Bloody Muppet show !!!