Proposed changes to rules regarding the treatment of expenditure related to the generation of non-arm’s-length income (NALI) have not passed the Senate and are likely to lapse ahead of the next federal election.
The Treasury Laws Amendment (2018 Superannuation Measures No 1) Bill 2018, which first entered Parliament in May 2018, was not passed by the Senate yesterday on what was likely to be its last sitting day before the election.
The bill proceeded through the House of Representatives from 24 May 2018 to 20 June 2018 and was introduced into the Senate on 25 June 2018, where it had both a first and second reading, opening the way for it to be passed, but has not progressed beyond that stage.
Under the changes proposed in the bill, the Income Tax Assessment Act 1997 would be amended to ensure a superannuation entity’s NALI would include income where expenditure in gaining or producing it was not an arm’s-length expense.
A further amendment to the Income Tax Assessment Act 1997, in conjunction with an amendment to the Taxation Administration Act 1953, would ensure that, in certain circumstances involving limited recourse borrowing arrangements, the total value of a superannuation fund’s assets is taken into account in working out individual members’ total super balances.
The Senate is due to sit again on 13 May, but it is widely expected an election will be called before that date, resulting in all current bills before the Parliament lapsing and unable to be acted upon by either house.
Regardless of which party wins the election, the bill would need to be reintroduced to the House of Representatives again after the election and proceed through both the lower house and the Senate before the changes could become law.
