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An Accountant has charged thru his firm to prepare account for his SMSF. Is this permitted under SIS? Is it a requirement under NALE? Or both?
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Hi John
Yes an accountant can change through his firm a fee for his firm to prepare accounts for his SMSF.
The NALI / NALE rules are explained in LCR 2021/2 - NALI - expenditure incurred under a non-arm's length arrangement & paragraph 49 states:
"For example, the non-arm’s length expenditure provisions will apply where a trustee (being an accountant by profession) contracts the bookkeeping or accounting services to their accounting firm, which charges non-arm’s length rates. "
Also refer:
"Example 6 – internal arrangement within an SMSF – trustee provides services to the SMSF
54. Leonie is a trustee of an SMSF of which she is the sole member. She is a chartered accountant and registered tax agent who is employed in an accounting and tax agent business. Leonie (in her capacity as trustee) prepares the accounts and annual return for the SMSF. She does not use the equipment or assets of her employer, nor does she lodge the annual return using her tax agent registration. As she performs these duties or services as trustee of the SMSF, she does not charge the SMSF for this work.26 The non-arm’s length expenditure provisions do not apply as the duties or services performed by Leonie are in her capacity as trustee rather than under an arrangement in which parties are dealing with one another on a non-arm’s length basis".
In relation to SIS (section 17A & B) a trustee can be remunerated for a role not done in the capacity as trustee if:
"(a) the trustee performs the duties or services other than in the capacity of trustee; and
(b) the trustee is appropriately qualified, and holds all necessary licences, to perform the duties or services; and
(c) the trustee performs the duties or services in the ordinary course of a business, carried on by the trustee, of performing similar duties or services for the public; and
(d) the remuneration is no more favourable to the trustee than that which it is reasonable to expect would apply if the trustee were dealing with the relevant other party at arm's length in the same circumstances."
Thanks
SMSF AAA