The law that will implement changes to the operations of the non-arm’s-length expenditure (NALE) provisions will apply from 1 July, the start of the 2025 financial year, after receiving royal assent but will have retrospective effect from 1 July 2018.
The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2023 received assent from the Governor-General on 28 June, the last business day of the 2024 financial year, after having passed both houses of parliament only days earlier on 25 June.
As such, the act takes effect on 1 July following the commencement schedule outlined in its preliminary section, which stated the portions related to NALE would start on the first day of the quarter that occurred after the act received royal assent.
There had been concerns the bill would not be passed in time to coincide with the start of the new financial year. After its introduction into parliament, it spent two-and-a-half months in the House of Representatives before heading to the Senate for four-and-a-half months, after which it was referred back to the lower house on two occasions after the upper house insisted on changes to schedules in the bill unrelated to the NALE provisions.
The act contains nine schedules of which schedule seven outlines the new NALE provisions as they relate to superannuation funds, specifically SMSFs and small Australian Prudential Regulation Authority (APRA) funds, as APRA-regulated funds were exempted from provisions.
The amendments, related to an increase to the instant asset write-off in schedule 1, were not agreed to by the House of Representatives and the Senate withdrew its insistence on their inclusion on 25 June, opening the way for the bill to be passed.
Despite its progress through parliament and into law, the SMSF sector remained opposed to its introduction, pushing for the changes to be abandoned and changes made to the Superannuation Industry (Supervision) Act to address NALE events.
The SMSF Association noted the changes were inequitable as they excluded APRA-regulated funds and created a two-tier superannuation system.
