- Technically Speaking
- Investments
Recent amendments to section 295-550 of the Income Tax Assessment Act 1997 have reignited discussions on the application of arm’s length principles to SMSFs. While these recent changes specifically address the tax implications for non-arm’s length expenses (NALE) and income (NALI), they also highlight the ongoing importance of compliance with section 109 of the Superannuation Industry (Supervision) Act 1993 (SIS Act), which governs the requirement for SMSF transactions to be at arm’s length for regulatory purposes.
Section 109 is central to maintaining the integrity of SMSF investments, requiring that all dealings, whether with related or unrelated parties, occur on a commercial basis.
This Technically Speaking bulletin will explore the practical application of section 109 as well as highlight how the principle of ‘arm’s length’ features throughout the SIS Act and is embedded in other key regulatory provisions.
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The contents of this resource are taken to be correct at the time of publication.
Complimentary CPD available for Technically Speaking
This SMSF Association Technically Speaking publication is worth up to 2 CPD hours (SMSF Association accredited) and 2 legislated CPD hours under the Regulatory Compliance, Technical Competence and Tax Financial Advice categories.
If you complete the reading but not the CPD quiz, you are able to claim 1 CPD hour under Non- Accredited CPD of the SMSF Association CPD Policy.
Disclaimer: Technical Papers contain factual information only and are prepared without considering particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. The information contained in this document does not constitute advice given by the SMSF Association to you. If you rely on this information yourself or to provide advice to other persons, then you do so at your own risk. The SMSF Association is not licensed to provide financial product advice, legal advice or taxation advice. We recommend that you seek appropriate professional advice before relying upon the information in this technical paper. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this paper is not considered financial advice for the purposes of the Corporations Act 2001. © SMSF Association