A partner of a large accounting firm has revealed the new Labor government has been alerted to industry concerns about the non-arm’s-length expenditure (NALE) legislation and that action regarding the matter may be imminent.
Speaking at the Chartered Accountants Australia and New Zealand National SMSF & Financial Advice Conference 2022 held in Sydney yesterday, Deloitte superannuation, SMSF and retirement savings partner Liz Westover said: “My understanding is that Treasury has briefed the Assistant Treasurer [Stephen Jones] on this matter. We don’t know whether he’s had the opportunity to look at it, bearing in mind it’s a new government and they’ve probably got a lot on their plate.
“But I remain hopeful that we may see something in the budget [about this issue].
“It would be most welcome if there was a budget announcement [on the matter]. It is a good news story for the government.”
At the same time, Westover told delegates it is doubtful the NALE compliance relief currently being exercised by the ATO will be further extended to cover the 2024 income year. The regulator earlier this year confirmed it will not be allocating compliance resources to enforce the NALE rules.
“The ATO is unlikely to review their position [stipulated] in [Law Companion Ruling (LCR) 2021/2]. They are sticking to their guns on their position in the LCR despite objection from a large portion of the industry that disputes their position that there is a sufficient nexus between general expenses of the fund and the non-arm’s-length provisions,” she noted.
“So we need legislative change.”
She took the opportunity to again point out the shortcomings of the NALE legislation as it stands.
“Change is needed [because] we have this incredibly disproportionate outcome for potentially minor indiscretions and this can lead to quite a catastrophic impact on [a person’s] retirement savings,” she said.
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