Accounting, ATO, Documentation

Accountants should use peers for SMSF paperwork

Accountants who run their own SMSFs have been encouraged not to manage their own affairs, with an expert claiming the savings are not worth the potential of having to justify the action to the ATO.

DBA Lawyers special counsel Bryce Figot said proposals to address deficiencies in the treatment of non-arm’s-length income (NALI) are contained in the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018, which is still before the Senate.

Figot said the bill has already received a draft ruling from the ATO, which provided two examples of accountants who were also trustees of their own funds and were able to manage their own affairs without falling foul of NALI arrangements.

He pointed out the NALI provisions would not apply when bookkeeping or preparation of the financial statements were not related to another party on any terms and “this was a big deal as most SMSFs do their own bookkeeping”.

At the same time, he cautioned accountants, particularly those who may have such work conducted by their practice, to consider having it done by a third party via an arm’s-length arrangement.

“In the example given, an accountant in their capacity as trustee can prepare financial statements and the NALI provisions do not apply, particularly if they are a sole trader,” he said.

“If you have employees, could you use them to draw up financial statements for your SMSF? If we go by this example, which is fine for sole traders, we could extrapolate that it would be fine for those with employees as well.

“My view is based on how well do you want to sleep at night – and it is don’t do it. Your meal ticket as an accountant is too precious and what are you really gaining? How much money will you really save? Perhaps $1000 to $2000 per annum, but how much do you value having completely squeaky clean affairs?

“In our lines of work we may need to go head to head with the ATO and they might disagree with us, and we need to have complete confidence that our own financial affairs are squeaky clean. This example suggests it may be okay, but for the money you will save, why do it?”

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