The ATO today published two new law companion rulings (LCR) on its legal database addressing legislative amendments currently being considered by the federal parliament.
LCR 2018/D10 is a draft ruling revealing how the commissioner will apply the law as determined by Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill with respect to non-arm’s-length income (NALI) as outlined in section 295-550 of the Income Tax Assessment Act 1997.
This amendment allows the law to categorise monetary gains derived from situations where an SMSF incurs losses or expenses that are less than might have been reasonably expected had the relevant transaction been executed at arm’s length as NALI.
Previously, the NALI was only defined by situations where the amount of income and not expenses determined the additional monetary gain that might have been expected had the transaction been conducted at arm’s length.
LCR 2016/12DC is a draft ruling that also relates to Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill and addresses how an individual’s total superannuation balance is calculated.
In particular, it looks at the effect the outstanding balance relating to a limited recourse borrowing arrangement entered into after 1 July 2018 will have.
Both LCRs are open for public comment.
The ATO has suggested reliance on either or both rulings in good faith will allow SMSF trustees to avoid any underpaid tax, penalties or interest in respect of matters covered by the rulings if they do not correctly state how a relevant provision applies to a particular trustee.