NALI provisions do not apply to ‘purely internal’ duties performed by fund trustees continues
In draft Law Companion Ruling (‘LCR’) 2019/D3, the ATO stated that the following factors indicate that an individual is performing an activity in their individual capacity:
- The individual charges the complying superannuation fund for performing the services. However, the individual can still be acting in their individual capacity if they do not charge the fund for performing the services.
- The individual uses the equipment and other assets of their business, or equipment/assets used in their profession or employment.
- The individual performs the activities pursuant to a licence and/or qualification relating to their business, or their profession or employment.
- The activity is covered by an insurance policy relating to their business, or their profession or employment (e.g., professional indemnity insurance).
If the trustee is not acting as a trustee but is instead providing services that are procured as a third- party, the NALI provisions are intended to apply. However, provided that the amount charged for any such services is not less than that which would be expected to be charged between parties dealing at arm’s length, the dealings will not be subject to the NALI provisions.
Note that, in such cases, the trustee of an SMSF would also be prevented from charging any more than the arm’s length price by S.17B of the SIS Act (which permits a trustee to charge up to an arm’s length amount for duties or services performed other than in the capacity as trustee).