Legislation, NALI/NALE

NALE bill in parliament stalemate

NALE Small business asset write-off Parliament House of Representatives Senate

The bill that will introduce the NALE general expenses provisions is locked up in parliament as the two houses disagree over proposed amendments.

The progress of the bill to make amendments to the non-arm’s-length expenditure (NALE) rules for general expenditure continues to be delayed as the two houses of parliament remain at odds over amendments to the bill unrelated to the NALE changes.

The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 progressed through the House of Representatives by the end of November last year, at which stage it moved to the Senate, where it was not addressed until 27 March this year.

At that time, the upper house requested amendments to increase the small business instant asset write-off threshold from $20,000 to $30,000, which is contained in schedule 1 of the bill, while the NALE amendments are contained in schedule 7, and sent the bill back to the lower house.

The instant asset write-off amendments were rejected by the House of Representatives on 15 May, with the Senate insisting on their inclusion in the bill the following day.

In response to this, the lower house yesterday voted for a second time to reject the amendments passed by the Senate and the bill will now return to the upper house for a third time where failure to agree on it will result in it being set aside.

The SMSF Association noted this outcome would create difficulties for small businesses, as well as funds looking for clarity on the handling of NALE for general expenses.

“This uncertainty will be a concern for many small businesses relying on the passage of these measures for expenditure in this financial year with a flow-on effect into 2024/25, given the recent federal budget announcement to extend the $20,000 instant asset write-off by a further 12 months,” the association told members.

“For SMSFs, amendments to the NALE rules for general expenses are also included in this bill. The ATO’s transitional compliance approach set out in Practical Compliance Guideline (PCG) 2020/5 was extended to the 2022/23 financial year only on anticipation of the passage of these amendments.

“With 30 June fast approaching, the Senate will not be sitting to consider the House’s insistence motion until the week commencing 24 June.

“In the meantime, we will engage with the ATO to ensure that the commissioner is aware that, if necessary, an urgent extension to PCG 2020/5 will be required.”

The limited sitting days for the Senate may also impact the likelihood of the Better Targeted Superannuation Concessions bill, which will introduce the Division 296 tax, being passed before the end of this financial year, with that proposed legislation yet to progress to the upper house for its first reading.

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