The NTAA recently contributed to a joint submission by the peak professional accounting, tax and superannuation bodies in Australia to the ATO regarding draft updates Law Companion Ruling LCR 2021/2DC and Taxation Ruling TR 2010/1DC2.  LCR 2021/2DC involves the superannuation fund non-arm's length income and expenditure provisions, and TR 2010/1DC2 concerns superannuation contributions. 

A copy of the joint submission is on our website — click here. 

The joint submission raised various concerns in relation to the draft rulings, including the following in relation to the non-arm's length income and expenditure provisions: 

• Concern that the ATO has remained silent on the fact that it is difficult to definitively determine what an arm's length price or value might be and that a range will be appropriate. 
• Further guidance is required about the type of evidence expected to prove a transaction has been conducted on arm's length terms. 
• Current ATO guidance does not enable SMSFs to identify whether services provided to it by a trustee constitute an internal fund arrangement or the provision of services in another capacity. 
• The ATO should provide sufficient further guidance in relation to the requirements of S.17B of the SIS Act (regarding remuneration of trustees) so that SMSFs are able to identify and manage this issue. The ATO should consider a 'safe harbour approach' for the challenges that arise when trustees provide services to their fund. 
• In some scenarios, the ATO may treat the same transaction as a contribution and as having non-arm's length income consequences. 
• There are a number of aspects concerning discount policies that would benefit from further explanation. 

We will continue to keep members informed in relation to this important development.