The SMSF sector will have a further opportunity to provide input into the final position taken by the ATO in regards to non-arm’s-length expenses (NALE) where an adviser or accountant provides services to their own fund.
ATO SMSF segment acting assistant commissioner Steven Keating said the regulator was in the process of finalising draft Law Companion Ruling (LCR) 2019/D3 in relation to NALE and had planned on doing so before the end of the last financial year, but had not done so because of COVID-19-related activities.
“The commissioner had intended to finalise the LCR before 30 June, but has been delayed as a result of the impacts of COVID-19 and resources being diverted to other projects,” Keating said during an online discussion hosted by the SMSF Association today.
Asked about the de minimis approach mentioned in the appendix to the ATO’s recently released Practical Compliance Guideline 2020/5, which extended its no-action position on NALE to the end of the 2021 financial year, he said the regulator was considering further information and consultation to assist SMSF practitioners.
“The commissioner is in the process of finalising his practical approach and we will consult before finalising the LCR,” he noted.
“We are looking at considering further clarification and more examples in the final ruling.
“We were asked to provide further guidance on the commissioner’s position on trustee services and the capacity in which a person provides services to a fund when they are also a trustee or director of corporate trustee, and we will get back to that as soon as possible and consult with industry before finalising it.”
In the same webinar, he also defended the SMSF fact sheet released by ASIC in late 2019 and its claims fund running costs were around $13,900.
“It is important to remember that ASIC’s fact sheet was not incorrect,” he said.
“What it reported was the only statistic available at that time and that we had available to us, which were the average expenses for running an SMSF.
“Now that we have published the median expenses I understand ASIC are intending to update the fact sheet, and that information is available and relevant for inclusion.”
ASIC recently told a parliamentary committee hearing it had received the updated data from the ATO and was had yet to decide on how it would update the fact sheet.
