Revised NALE rules 'miss chance to clarify SMSF bugbear'

October 2023

In a recent article in the Accountants Daily, NTAA spokesperson James Deliyannis warned that the Government had missed a chance to clarify a crucial distinction for fund members who provide services to their SMSFs, in legislation introduced to Parliament on 13 September 2023. That is, while the amendments will reduce super fund non-arm’s length expenses (‘NALE’) penalties, they leave unresolved how to determine whether a trustee was acting as an individual or acting in their role as the fund trustee. 

Under the proposed amendments, where a trustee provides services to their SMSF in their capacity as trustee, the arrangement will be considered internal to the fund and the NALE rules will not apply. However, if a trustee provides the same service in an individual capacity, then the fund would breach the NALE rules unless the trustee charges a market fee. Mr Deliyannis said this may mean penalties for many SMSFs and tricky decisions for the ATO. 

Editor: We have already made submissions to the Government regarding this problem and will continue pressing them to address this. The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 is discussed further on page 3.