Super funds and non-arm’s length expenditure: SMSF auditor obligations

The ATO has extended to 2021-22 its transitional compliance approach for the non-arm’s length expenditure (NALE) rules set out in Practical Compliance Guideline PCG 2020/5.

As a result of the extension, the ATO says approved SMSF auditors do not need to modify their opinion in Part A of the SMSF Independent auditor’s report (IAR) for the income years where the ATO’s transitional compliance approach in PCG 2020/5 applies.

However, the ATO reminds SMSF auditors that they will still need to consider modifying their opinion in Part A of the IAR where the fund incurred NALE that directly related to the fund deriving particular ordinary or statutory income as the compliance approach in PCG 2020/5 does not apply. The ATO said it will provide a further update for SMSF auditors when it finalises Draft Law Companion Ruling LCR 2019/D3.