Legal news
The ATO has taken an aggressive approach on non-arm’s length income (NALI) for a number of years now, both in its public documents and via its audit teams. This has culminated in an approach that puts a high expectation on SMSF’s in relation to proving arrangements are on an arm’s length basis – in particular, in relation to benchmarking such arrangements.
After industry pushback against the disproportionate application of the non-arm’s length income (NALI) and non-arm’s length expenses (NALE) rules, Treasury has a released a discussion paper to modify the application of the NALI/NALE rules.
After seeking advice from an independent advice panel, the ATO has released its finalised Law Companion Ruling setting out the ATO view on the non-arm’s length expenditure (NALE) amendments to section 295-550 of the Income Tax Assessment Act 1997 (ITAA97), LCR 2021/2. In addition, the ATO has amended its contribution tax ruling TR 2010/1. The final LCR and amendments to TR 2010/1 partially soften the ATO views on the application of NALE.
The ATO has provided some welcome clarification for auditors regarding their obligations to report on non-arm’s length expenditure (NALE) incurred by a super fund of a general nature.
