Plans to ensure the NALE and NALI provisions do not have unintended consequences have been welcomed, but the outcome for SMSFs requires more detail.

The federal government has responded to concerns about the impact of non-arm’s-length expense provisions and will move to ensure they do not go further than intended.

Having an SMSF participate in an employee share scheme may not automatically trigger the NALI provisions should an acquisition discount be involved.

The Tax Institute has put forward revised NALE rules that remove the tax slug for super funds but still tackle non-arm’s-length arrangements.

The government must step in and take action on the application of the NALE rules to ensure they do not create negative unintended consequences.

Trustees and their advisers cannot automatically assume transactions involving NALE will be detected by an SMSF auditor.

Detecting non-arm’s-length expenditure situations may not be straightforward, regardless of examples provided in Law Companion Guide 2021/2.