Recent amendments clarify treatment of SMSFs incurring non-arm’s length expenditure
As discussed above, non-arm’s length arrangements that involve superannuation funds deriving more income than might have been expected under an arm’s length arrangement will continue to result in them deriving NALI following the amendments made to S.295-550 (including private company dividends). Further, with regards to income derived on or after 1 July 2018 (regardless of whether the relevant scheme was entered into before that time), the definition of NALI has been expanded to capture the following arrangements involving non-arm’s length expenditure:
- An amount of ordinary or statutory income is derived by a complying superannuation fund (other than a private company dividend or an amount derived in the fund’s capacity as a beneficiary of a trust) where:
- there is a scheme in which the parties were not dealing with each other at arm's length;
- the fund incurs a loss, outgoing or expenditure of an amount in gaining or producing the income; and
- the amount of the loss, outgoing or expenditure is less than the amount that the fund might have been expected to incur had those parties been dealing with each other at arm's length in relation to the scheme.
- An amount of ordinary or statutory income is derived by a complying superannuation fund (other than a private company dividend or an amount derived in the fund’s capacity as a beneficiary of a trust) where:
- there is a scheme in which the parties were not dealing with each other at arm's length; and
- the fund does not incur a loss, outgoing or expenditure that the fund might have been expected to incur if those parties had been dealing with each other at arm's length in relation to the scheme.
- Should you have any queries, please contact Tax Ideas Accountants & Advisers on +61 2 83181545
- Alternatively, you can book an appointment in our live calendar.
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- Topics on self-managed superannuation fund – SMSF (2)
- Topics on self-managed superannuation fund – SMSF (3)
- Topics on self-managed superannuation fund – SMSF (5)
- Topics on self-managed superannuation fund – SMSF (6)
- Topics on self-managed superannuation fund – SMSF (7)
- Topics on self-managed superannuation fund – SMSF (8)
- Topics on self-managed superannuation fund – SMSF (9)
- Topics on self-managed superannuation fund – SMSF (10)
- Topics on self-managed superannuation fund – SMSF (11)
- Topics on self-managed superannuation fund – SMSF (12)
- Topics on self-managed superannuation fund – SMSF (13)
- Topics on self-managed superannuation fund – SMSF (14)
- Topics on self-managed superannuation fund – SMSF (15)
- Topics on self-managed superannuation fund – SMSF (16)
- Topics on self-managed superannuation fund – SMSF (17)
- Topics on self-managed superannuation fund – SMSF (18)
- Topics on self-managed superannuation fund – SMSF (19)
- Topics on self-managed superannuation fund – SMSF (20)
