The rules behind the NALI and NALE acronyms
Published Date: 1 Aug 2023
This article examines the circumstances in which a non-arm’s length expense (NALE) may result in the derivation of non-arm’s length income (NALI) for superannuation funds in Australia. It summarises the ATO’s views as outlined in LCR 2021/2 and their implications for selfmanaged superannuation funds (SMSFs). The NALI rules were designed to prevent income diversion through non-arm’s length dealings, leading to tax advantages for superannuation funds. LCR 2021/2 provides guidance on the application of these provisions in a range of scenarios, including for specific and general fund expenses. The government’s proposed changes to the NALI provisions in relation to general fund expenses for SMSFs and large APRA-regulated funds are also discussed. Professional advisers must understand these rules to ensure compliance and effective tax planning for their SMSF clients, considering the potential impact on tax liabilities for SMSFs acquiring assets or services from related parties below market value.
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- Published By: Craig Day
- Published On:1 Aug 2023
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