The finalisation of the ATO’s non-arm’s-length expenditure (NALE) ruling will have immediate relevance for SMSF practitioners offering discounts to staff and those practitioners should ensure they plan ahead, a technical expert has said.
SuperGuardian education manager Tim Miller said practitioners awaiting the finalisation of NALE within the ATO’s Law Companion Ruling (LCR) 2019/D3 should not delay turning their attention to items such as staff discounts in order to mitigate their risks ahead of time.
“If a business currently offers discounts to staff, then we need to act straight away, so if there’s a change or if the ruling is finalised as it currently says, then we need to be able to adapt our practices straight away, otherwise we’ve got potential for NALE,” Miller said recently during a SuperGuardian webinar.
Regarding the time frame for when the ruling would be finalised, he said the sector would benefit from knowing for certain how the ATO will be dealing with NALE sooner rather than later.
“Let’s hope that we see something early in the new calendar year so we can at least put it to bed, and anyone charging discount administration fees and those sorts of issues can start to think about it,” he said.
“The ATO has verbally indicated there will be a certain level of common sense. But also, we’ve had a change in commissioner and that often brings a change in attitude.”
In addition, Miller urged SMSF practitioners to always recommend to their clients that all transactions be undertaken and maintained on commercial terms.
He also warned them to be aware of the impact of COVID-19 rent relief deferrals on NALE regardless of the ATO’s recently stated stance.
Last week, Smarter SMSF chief executive Aaron Dunn said the finalisation of NALE within LCR 2019/D3 was a key measure SMSF accountants and advisers should look out for in 2021.