The ATO has released its updated Law Companion Ruling (LCR) 2021\/2 regarding the application of non-arm\u2019s length income (NALI) laws with the SMSF Association giving it a mixed welcome noting it still lacks specific guidance in places.<\/p>\n
<\/p>\n
.<\/p>\n
The LCR 2021\/2 was released yesterday, along with Taxation Ruling 2010\/1 \u2013 which addresses non-arm\u2019s length arrangements in regards to superannuation contributions, with the industry body hailing changes it had proposed.<\/p>\n
\u201cIt was pleasing to see the ATO address some of the feedback provided by the SMSF Association including, for instance, by making it clearer that when dealing with the provision of services, the NALI provisions do not apply to services that relate to complying with, or managing, the SMSF\u2019s income tax affairs and obligations \u2013 which are ordinarily deductible under section 25.5 [of the\u00a0Income Tax Assessment Act (ITAA) 1997<\/em>],\u201d the industry body stated.<\/p>\n Speaking at the Class Ignite 2025 event in Sydney today, SMSF Association chief executive Peter Burgess added the guidance was appreciated but also limited in scope.<\/p>\n \u201cWe were hoping to see this [provision of services issue] explained in more detail in the ruling and what we did see is a footnote,\u201d he said.<\/p>\n \u201cThey have added a footnote to clarify that when they are talking about expenses, they are not talking about expenses deductible under section 25.5.<\/p>\n \u201cWhen talking in the context of services provided by accountant, give us some examples as to what services we are providing to an SMSF that are not deductible under section 25.5 because most of the things we do are [under that section].\u201d<\/p>\n \u201cWe wanted the ATO to make this clearer because we\u2019ve already seen two private binding rulings issued on this issue of a partner in an accounting firm who provided services to his own SMSF on non-arms length terms and the question was whether it was NALI?<\/p>\n \u201cThey went into great detail about if the service being provided was in the capacity of a trustee or a professional and our argument is that\u2019s irrelevant because if it\u2019s a service deductible under section 25.5, these provisions don\u2019t apply anyway.\u201d<\/p>\n The peak sector body added the final rulings also clarified the interaction between contributions arising through value shifting arrangements and the NALI provisions but lacked any information as to how NALI breaches could be addressed by an SMSF.<\/p>\n \u201cMost disappointingly, the compendium to LCR 2021\/2 makes it clear that the Commissioner does not consider there is room for rectification nor reimbursement to fix a transaction that gives rise to non-arm\u2019s length expenditure \u2013 resulting in a potentially small trustee oversight leading to significant tax penalties for the fund.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n September 25, 2025 The ATO has released its updated Law Companion Ruling (LCR) 2021\/2 regarding the application of non-arm\u2019s length income (NALI) laws with the SMSF Association giving it a mixed welcome noting it still lacks specific guidance in places.<\/p>\n","protected":false},"author":1,"featured_media":2277,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/2276"}],"collection":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=2276"}],"version-history":[{"count":1,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/2276\/revisions"}],"predecessor-version":[{"id":2278,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/2276\/revisions\/2278"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media\/2277"}],"wp:attachment":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=2276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=2276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=2276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nJason Spits
\nsmsmagazine.com.au<\/p>\n","protected":false},"excerpt":{"rendered":"