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ATO reveals approach to NALE under NALI provisions

ATO
Adrian Flores
01 June 2020 — 1 minute read

The Australian Taxation Office has announced how it will apply the non-arm’s length income provisions to “non-arm’s length expenditure” in its latest practical compliance guideline.

In PCG2020/5 released yesterday, the ATO sets out a transitional compliance approach for a complying superannuation entity concerning the application of the amendments to section 295-550 of the Income Tax Assessment Act 1997, where a superannuation entity incurs certain non-arm’s length expenditure (or where expenditure is not incurred) in gaining or producing ordinary or statutory income.

The regulator said PCG2020/5 should be read in conjunction with draft Law Companion Ruling LCR 2019/D3 Non-arm’s length income – expenditure incurred under a non-arm’s length arrangement.

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In the guide, the ATO defined a complying superannuation entity as a complying superannuation fund, a complying approved deposit fund or a pooled superannuation trust.

“The ATO will not allocate compliance resources to determine whether the NALI provisions apply to a complying superannuation fund for the 2018–19, 2019–20 and 2020–21 income years where the fund incurred non-arm’s length expenditure of a general nature that has a sufficient nexus to all ordinary and/or statutory income derived by the fund in those respective income years (for example, non-arms length expenditure on accounting services),” the regulator said.

“This transitional compliance approach does not apply where the fund incurred non-arms length expenditure that directly related to the fund deriving particular ordinary or statutory income.”

Adrian Flores

Adrian Flores

Adrian Flores is the deputy editor of SMSF Adviser. Before that, he was the features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at This email address is being protected from spambots. You need JavaScript enabled to view it..

ATO reveals approach to NALE under NALI provisions
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