Pro bono work can pass NALE rules

pro bono NALE rules

The provision of pro bono services to an SMSF is not automatically outlawed by the NALE rules as defined by the ATO in LCG 2012/2.

SMSF trustees can receive pro bono services for their super fund and not fall foul of the non-arm’s-length expenditure (NALE) rules, a technical specialist has said.

“There may be arrangements where work [for the fund] could be pro bono [and not be caught by the NALE provisions], but it is incumbent upon being able to demonstrate that the trustee or director is not able to influence that service provider in any way, shape or form as to the supply of those services,” Smarter SMSF chief executive Aaron Dunn explained during a recent webinar.

During the same session, Dunn clarified how the rules regarding discounted administration services for employees of an accounting firm will be assessed by the ATO as outlined in Law Companion Guide 2021/2.

More specifically, he pointed out not only are discounted services made available to staff allowable under the NALE rules, the level of discount did not necessarily have to be the same for all staff members.

“[As long as] the discount is available to all staff of the firm and is not influenced by [any particular employee], the discounted rate [will be deemed to have been provided] to [the staff member] on an arm’s-length basis,” he said.

“But can we have different levels of discount? Now potentially you can. There may be a higher discount that is available to [accounting firm] partners [than that made available to other staff].”

According to Dunn, these situations will not trigger the NALE rules as long as the tiered discount level of the firm is documented and it can be proven the higher discount has been applied in adherence to this company policy.

He noted accounting firms essentially had to demonstrate any decision to provide discounted SMSF services to staff members did not involve an arbitrary component to ensure NALE compliance.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital