The government is consulting on Treasury Laws Amendment (Measures for Consultation) Bill 2023: Non‑arm’s Length Expense Rules for Superannuation Funds to enact amendments to the non‑arm’s length income (NALI) provisions announced in the 2023‑24 Budget.
The amendments to the NALI provisions will apply to expenditure incurred by superannuation funds, referred to as the non‑arm’s length expense (NALE) rules.
Consistent with the 2023‑24 Budget measure, the bill contains amendments to the Income Tax Assessment Act 1997 which:
- Limit application of the NALE rules to self‑managed superannuation funds (SMSFs) and small Australian Prudential Regulation Authority (APRA) regulated funds (SAFs).
- Distinguish between specific and general expenses for the purposes of NALE rules for both general and specific expenses of the fund.
- Set the amount of income taxable as NALI from a general expense breach by an SMSF or SAF as twice the difference between the amount that would have been charged as an arm’s length expense and the amount that was actually charged to the fund.
- Limit potential income of the fund taxable as NALI to the fund’s taxable income less contributions and related deductions.
- Exempt expenses which were incurred, or might have been expected to be incurred before the 2018‑19 income year.