The non-arm's length income (NALI) provisions have been re-written to include situations where expenses of an SMSF are reduced in order to obtain a non-commercial benefit.
This law strengthens rules which were previously only released as guidance by the ATO for SMSFs. Specifically, an income tax liability will be enforced as opposed to previous interpretations of tax and super regulations in relation to super fund borrowings.
ATO guidance and rulings has provided further situations where an SMSF may have underreported non-arm's length expenditure, including where it may apply to all income of the fund.
Source: ATO LCR 2021/2; ATO PCG 2020/5; Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019
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