New SMSF expense rules: what you need to know

If you manage a self-managed superannuation fund (SMSF), recent changes to tax rules for certain fund expenses may affect you and the fund.

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These changes may even apply to services provided for free and/or paid at less than market prices and could result in significant extra tax.

The new rules focus on “non-arm’s length general expenses” – services provided to your SMSF at below-market prices or for free. Income related to these general expenses may be classified as “non-arm’s length income” (NALI) and taxed at 45%. The new rules took effect on 29 June 2024, but are retroactive to 1 July 2018.

These new rules could catch out professionals trying to save their SMSF some money. If you’re providing services to your SMSF or getting services at below-market rates, you may be at risk, and you should review these new rules for further guidance.

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