The ATO has cautioned SMSFs to continue reporting limited recourse borrowing arrangements (LRBA) and non-arm’s-length income (NALI) in their annual returns as per current instructions, despite new legislation being introduced into parliament last week that will affect the reporting process.
The legislation – the Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2019 – was previously introduced into parliament before the federal election and was reintroduced on 24 July.
The ATO stated the legislation, when passed, may impact on LRBAs and NALI for some SMSFs for the 2019 financial year onwards.
“Until the bill receives royal assent, you should continue to report information as instructed in the existing 2019 SMSF annual return instructions,” it said.
“We will update our web content and relevant instructions when the bill becomes law.”
The ATO’s reminder follows comments from the SMSF sector that the new legislation has raised further questions on the application of the new NALI rules and what should be reported under the new LRBA requirements.
In an update in late May, the ATO reminded SMSFs that the annual return was more than an income tax return, and of the 11 sections contained in the former, funds had to complete at least six sections.
The six sections are:
- SMSF information,
- deductions and non-deductible expenses,
- income tax calculation statement,
- member information and/or supplementary member information,
- assets and liabilities, and
- declarations.
The other sections, which include income and losses, need only be completed if they apply to an SMSF.
