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@momentummedia.com.au
If only This was to do with the reintroduction to the accountants exemption.
This is a ‘no-brainer’. Why was it ever raised as an issue in the first place? It is not a ‘welcome surprise’ but rather, an expected outcome. Taken to its full conclusion, if unpaid time spent on administering their fund was regarded as NALI, then so to would the work of EVERY trustee who keeps the records for their SMSF. Nonsense!
At last – some common sense prevails
How is this a surprise? I’m more surprised to see it was ever an issue. Trustee’s can prepare their own accounts. It’s no different. I also prepare accounts for family members at no charge. Let me guess, there will be an issue with sole purpose or something stupid next. Why do people insist on making issues out of nothing?
Should the market value then get considered as a contribution? There is growth in the assets of the fund, being the bank account, to the extent to which it is not reduced (which it would be if a third party was engaged). Simply applying the same logic that arises if a fund member does work to improve the value of other asset eg property.