SMSF Staff Discount Policy

Overview

DBA offers staff discount policies to firms that provide SMSF services to staff, including employees, directors, partners, office holders and shareholders. Many firms offer a discount without any documented policy and this suite of documents provides not only an effective and appropriate SMSF staff discount policy but also provides details in relation to managing potential Non-arm’s length income (NALI) and expense (NALE) issues relating to discounts especially in relation to related entities and the allocation of expenses.

Why should my firm have an SMSF staff discount policy?

Firms offering a staff discount for SMSF related services must ensure than an appropriate policy is in place. If a firm’s discount policy is not in line with the ATO’s position in Law Companion Ruling LCR 2021/2, this can result in NALE for any staff member’s SMSF that obtains discounted services. NALE can give rise to a substantial tax liability under the NALI provisions in s 295-550 of the Income Tax Assessment Act 1997 (Cth).

Our documentation aims to minimise the potential NALI risk relating to a firm providing a staff discount.

What’s included

• Covering letter and completion checklist
• Firm discount policy
• Suggested letter to staff notifying them of the policy.

The standard policy includes a scope of services with a range of inclusions and exclusions that can be tailored by you to suit your specific needs. This policy applies to SMSF services only, it is not applicable for services involving related SMSF entities such as unit trusts. Firms seeking to implement a discount policy should ensure that the discount is consistent with normal commercial practice and will need to obtain appropriate benchmark evidence to support the discount they offer is commercial in line with the scope of services offered.

For an additional fee, DBA Lawyers can also offer in-house training to make sure the policy is properly implemented and can tailor a policy in line with your specific requirements, if instructed.

For more information and related articles

• SMSF Staff Discount Policy – do you have one?
• Firms providing discounted SMSF services to staff need an appropriate discount policy ASAP

• LCR 2021/2 — discounts to SMSFs invoke NALI
• SMSFs, employee share schemes & NALI