Legislation, NALI/NALE, Superannuation, Tax

Progress of NALE bill uncertain

NALE non-arm’s length expenses Chartered Accountants Australia and New Zealand Tony Negline Parliament

Changes to the rules around non-arm’s length expenses may not pass parliament before 30 June raising doubts as to their application in the current financial year.

The progress of the bill that will implement new non-arm’s length expenditure (NALE) rules may not pass through Parliament by the end of the financial year casting doubt on its application to the current financial year.

Chartered Accountants Australia and New Zealand superannuation and financial services leader Tony Negline explained the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, in which schedule 7 introduces the NALE rules that will apply to superannuation funds, was currently delayed due to issues elsewhere in the bill.

“This bill is being dealt with by the House of Representatives today and it also contains measures related to instant asset write-offs,” Negline said in a post-budget webinar.

“The Senate wanted that item to be adjusted with the instant asset write-off increased from $20,000 to $30,000 and made available to a larger range of small to medium enterprises. The House of Representatives have knocked those amendments back and they’ve sent the bill back to the Senate.”

Negline pointed out this movement between the two houses reduces the time for the bill to be passed as the Senate has a limited number of sitting days before 30 June.

“A potentially nasty issue is that, because the Senate is only sitting for today, tomorrow, and then the four days in the last week of June, there is a chance this piece of legislation may not actually become law,” he noted.

“We are concerned about the status of non-arm’s length income which may not actually apply to this current calendar year.”

He added the limited sitting days for the Senate may also impact the passage of the Division 296 superannuation tax bill, also known as the Better Targeted Superannuation Concessions.

This bill was also due to be debated in the House of Representatives today after a Senate committee recommended it be passed unamended and at time of publication the relevant debate had just commenced, he said.

“Where this lands in the Senate we don’t quite know and the government could get the Greens and two or three other crossbench senators to vote for the bill and it would go through as announced.

“This may be before the end of June but with the Senate only sitting for a small number of days between now and 30 June this measure may not become effective legislation before that date.

“We still remain concerned about the impact on small businesses, the lack of indexation, the $3 million threshold, the taxing of unrealised gains and the emerging issue of the impact on defined benefit pensions.”

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