Legislation, NALI/NALE

Senate approves NALE bill

Senate House of Representatives NALI NALE SMSF Association Parliament

The Senate has passed a bill to amend the rules regarding non-arm's length expenditure without opposition, advancing it to the House of Representatives for a third reading.

A bill to determine how non-arm’s-length expenditure (NALE) will be managed within superannuation funds has passed through the Senate with no further amendments.

Specifically, schedule 7 of the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 relating to the two times difference penalty levied on non-arm’s-length income (NALI) for NALE will be retained as proposed when the bill initially entered parliament.

Following the Senate’s approval of the bill, the SMSF Association (SMSFA) reiterated its position that changes to the NALE regime in 2019 were unnecessary and constituted an overreach to address misconduct practiced by a very small minority in the SMSF and superannuation sectors.

“While the amendments are a vast improvement on the current law, it remains our view that the 2019 NALE amendments should have been repealed for all funds, not just large Australian Prudential Regulatory Authority (APRA)-regulated funds,” the organisation stated.

“Given the existing compliance frameworks present in the superannuation and taxation compliance legislation, the risks associated with NALE are insignificant and the likely outcomes innocuous.”

A review by the Senate Economics Legislation Committee in November recommended the bill be passed, with the committee receiving submissions from industry and professional bodies calling for the repeal of the current NALE arrangements and modifications to the Superannuation Industry (Supervision) (SIS) Act in lieu of a dedicated piece of legislation.

Concerns have also been expressed by some quarters of the industry regarding the perceived neutrality of the NALE bill, given APRA-regulated funds are exempt from the measure.

The bill will now return to the House of Representatives to consider the Senate’s amendments, with parliament set to resume on 14 May.

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital