TEN
Introduction
The Australian Taxation Office (ATO) has made it clear: when a self managed superannuation fund (SMSF) receives services or assets on non-commercial terms - or fails to incur necessary expenses - the result can be harsh. Non-arm’s length expenditure (NALE) can trigger nonarm’s length income (NALI), exposing the fund to significant tax consequences.
This session unpacks the ATO’s evolving stance and helps SMSF professionals identify and manage NALE/NALI risks, and covers more specifically:
The situations where NALE can trigger NALI and the resulting tax consequences
Can adverse tax consequences arise from:
a solicitor providing a trust deed upgrade service for their SMSF?
an accountant providing tax and accounting services for their SMSF?
a plumber installing a hot water service in a property owned by their SMSF?
a building company renovating a property owned by the director's SMSF?
How NALE impacts on CGT assets:
acquired from a related party for more or less than market value
when leased to a related party
Can market value discrepancies with non-arm's length transactions be rectified by a journal treating the difference as member contributions?
Tips for record keeping when non-arms-length transactions are involved
How the market value substitution rule works for in-specie transfers of assets in and out of an SMSF
The ATO's compliance approach for NALE/NALI breaches
Practical examples of NALE/NALI market value issues in practice and tax calculations for breaches
The full paper is available to Sladen Smart Members sign up/login here to continue reading.