How Not Charging Accounting Fees Can Impact Your SMSF Income
In 2021, Sue manages her Self-Managed Super Fund (SMSF) and hires an accounting firm (where she's a partner) to handle the fund's accounting tasks. Surprisingly, the accounting firm doesn't bill the SMSF for their services.
According to S.295-550(1), this setup counts as a non-arm's length arrangement. In simpler terms, because Sue's firm didn't charge anything for the accounting work, the Australian Taxation Office (ATO) views it as not following fair market practices.
This decision affects the SMSF's income for 2021. The ATO considers all the money the SMSF made during that year as Non-Arm's Length Income (NALI). This means it might face stricter tax rules or penalties.
It's worth noting that the ATO's final ruling on this matter, LCR 2019/D3, wasn't available at the time of writing. The ATO has been gathering feedback, including input from organizations like the NTAA, to refine their approach, especially concerning general expenses.
For questions, reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment with our live calendar.
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