Non-Arm’s Length Expenditure

Fact Find:

Over time tax law has evolved to disincentivise certain income from being diverted into SMSFs or to discourage trustees from engaging in certain practices to enhance their superannuation balance and reduce their tax liability.  As a result of super reforms and reduced contribution caps, the Government are concerned that people will look for new ways to get more funds into SMSFs using various schemes or strategies.  Having certain income treated as non-arm’s length income (NALI) and being taxed at the highest marginal tax rate, is intended to be the disincentive in the otherwise concessionally taxed super environment.  To broaden the scope of NALI, the Government have introduced the concept of non-arm’s length expenditure (NALE) which requires a fund to ensure that not only is all income derived on a commercial basis but that all expenses associated with fund income are commercial. These new NALE provisions apply from 1 July 2018.

To read this fact sheet in its entirety download the PDF version here.

Related Posts

Understanding SMSF Expenses

SMSFs inevitably incur expenses during their operating life. It is important to understand that of the expenses incurred, not all

Apportioning SMSF Expenses

Where an SMSF has retirement phase pension accounts and accumulation accounts there may be a need to apportion expenses to

AFSL 485643
Copyright © 2019 – 2020 SuperGuardian Pty Ltd ABN 57 113 986 968
Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer: Any information that is financial product advice is provided by SuperGuardian Pty Ltd (AFSL No. 485643 ). The advice provided is general in nature and is not personal financial product advice. The advice provided has been prepared without taking into account your objectives, financial situation or needs and because of this you should, before acting on it, consider the appropriateness of it having regard to your objectives, financial situation and needs. You should carefully read and consider any product disclosure statement that is relevant to any financial product that has been discussed before making any decision about whether to acquire the financial product. Please refer to SuperGuardian FSG for contact information.

By accessing and/or using information at or through this site each user waives and releases SuperGuardian to the full extent permitted by law from any and all claims relating to the usage of the material made available through the website. In no event shall SuperGuardian be liable for any incident or consequential damages resulting from use of the material.