The ATO has given notice that all non-commercial LRBA arrangements must be at arm’s length by the 31st January 2017. Thereafter they will be subject to close scrutiny and penalties may arise for those in breach.
We recommend that you urgently review all your clients SMSFs that have LRBA arrangements to ensure that they are compliant and allow enough time to restructure their financial arrangements if required.
Why is this important?
- The ATO has given accountants and trustees until 31 January 2017 to rearrange related party LRBAs where they may be currently under non-arm’s length terms.
- The ATO will not take audit action for years prior to 1 July 2015 if trustees meet this deadline.
- The ATO will commit resources to reviewing compliance.
- The top marginal tax rate (instead of 15% or 0%) can apply to arrangements that fall foul of the non-commercial rules.
- Penalties and interest charges can also apply.
- Trustees will be relying on accountants to ensure compliance.
How Can TriSuper Auditors assist?
We can now offer a service to accountants and advisors to review and report on existing SMSF Related Party LRBA’s compliance with the Non-Arm’s Length Transaction (SIS Act) and Non Arm’s Length Income (ITAA 97) provisions.
Specifically we will
- Review in detail the existing Related Party LRBA
- Compare the arrangement against requirements of section 109 of the SIS Act and Section 295-550 of the ITAA 1997, taking into account ATO Guideline PCG 2016/5 and TD 2016/6.
- Provide a diagnostic report on current compliance of the LRBA with Non Arm’s Length Rules and ATO Guidance.
- Where there are breaches offer remedies to ensure compliance
A detailed information sheet on this service is available for download here.
Of course if you have any questions about the new rules or our LRBA Review service please contact me on 02 4961 2788 or 1300 TRISUP