The LCR needs to provide solid guidance on how a superannuation fund can establish an appropriate commercial price especially for income and expense items.

We are concerned that the ATO remains silent on the fact that it is ubiquitously difficult to definitively determine what an arm’s length price or value might be and that a range will be appropriate.

Further:

• The LCR should also contain guidance on how small super funds may acceptably determine the lower and upper bounds of appropriate commercial prices and how they may then decide on an appropriate price or value to apply in a particular circumstance
• We consider that the ATO has provided insufficient guidance to enable SMSFs to identify whether services provided to it by a trustee constitutes an internal fund arrangement or the provision of services in another capacity
• It would be valuable for the finalised LCR to provide guidance as well as examples of services that could be provided by trustees who work in a trade occupation
• We request clear guidance in the finalised NALI/E LCR in relation to determining whether trustees of fixed unit trusts can apply their professional skills in fulfilling their duties without breaching their trustee capacity and tainting distributions to SMSF unit holders
• We would argue that personal guarantees provided by super fund trustees should not lead to the NALI/E provisions applying because third party arrangements by lenders or others (such as builders) would demand a super fund’s trustees provide a personal guarantee.