TEN
NALI – forever in the headlines
Non-arm’s length income (NALI) has been a hot topic of discussion and debate in the SMSF industry in recent years, in particular since the ATO first released their draft ruling on non-arm’s length expenditure (NALE) in 2018 (and its subsequent iterations). Recently, the long debated amendments to NALE provisions were passed in Parliament and received Royal Assent in June 2024.
NALI is one of the strongest tax penalties currently available to the ATO. While income of an SMSF is typically taxed at 15% (or 0% for assets supporting a retirement phase income stream), NALI is taxed at the highest marginal rate – currently 45%. It’s therefore unsurprising that any developments in the law or administration of the NALI provisions attracts widespread attention. ]
The proposed amendments to the non-arm’s length expense (NALE) provisions have softened the tax consequences for expenses of a “general” nature. However, there is no such luck for NALE of the “specific” kind or “normal NALI”. This session delves into the types of specific expenses that can be caught under the NALE rules and the consequences that can follow.
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