ATO Clarifies When Trustees Can Help Their Own SMSFs Without Triggering NALE Issues

The Australian Taxation Office (ATO) has released updated guidance on how the Non-Arm’s-Length Expenditure (NALE) rules apply to self-managed super funds (SMSFs). These updates are part of changes to Law Companion Ruling (LCR) 2021/2, and they bring some welcome clarity for trustees who like to be hands-on with their fund’s affairs.

What Are the NALE Rules?

The NALE provisions were designed to stop situations where someone provides goods or services to their SMSF on overly generous terms — for example, doing professional work for the fund for free, or at mates-rates — which could give the fund an unfair tax advantage. If a fund breaches these rules, the income linked to that non-arm’s-length arrangement can be taxed at the top marginal rate (45%), so it’s an area trustees need to understand carefully.

What Has Changed?

The ATO has confirmed that if you perform work for your SMSF purely in your role as trustee — and you don’t charge for it — that won’t trigger NALE.
This covers things like handling basic paperwork, managing investments, or arranging repairs — the sorts of tasks many trustees naturally take on.

However, if you’re doing work for the fund in a professional or business capacity (for example, as a licensed builder, accountant, or financial adviser), you can only charge the fund for that work if you meet all of the conditions in section 17B of the Superannuation Industry (Supervision) Act.
These conditions include:

• You hold the appropriate license or qualification.
• You run a genuine business offering those services to the public.
• The work performed for your SMSF is within the ordinary course of that business.

If those requirements aren’t met, you simply can’t charge your SMSF for the work — but importantly, doing the work for free in that case won’t breach the NALE rules either.

What This Means for You

This clarification should provide peace of mind for trustees who like to look after their fund themselves. In simple terms, you can help your SMSF as much as you like, as long as you’re not charging for services that you’re not properly licensed or in business to provide.

If you’re unsure how these rules apply to your situation — or whether any work you’ve done for your SMSF could raise NALE concerns — we’re here to help.

If you’d like to talk through what this means for you or your fund, please get in touch with the Divergent Numbers team. We can help you understand where the boundaries are and make sure your SMSF stays compliant and well-protected.