POWERED BY MOMENTUM MEDIA
NALI consultation offers ‘umbrella of hope’ for funds
The industry has reacted to the Government’s consultation on non-arms length income.
Earlier this week, the Government said it would consult with industry stakeholders on the appropriate operation of the non-arms length income (NALI) and expense provisions following industry feedback.
Tony Negline, CA ANZ superannuation leader, said NALI had been an issue as far back as September 2019.
“Since an Australian Taxation Office (ATO) ruling was first issued on this law as a draft in September 2019, the accounting and finance industry have spent over two years asking the Government for the law to be narrowed to its original intent.
“There are major consequences for minor errors which means that solutions would have had to be worked through very carefully requiring considerable time and expertise.
“The law and ATO ruling has been a dark cloud over the profession’s head who have been waiting with bated breath for the storm.
“This announcement provides an umbrella of hope that there will be more certainty and specific interpretation to these rules for super funds.”
Self-Managed Super Fund (SMSF) Association deputy chief executive and director of policy and education, Peter Burgess, said NALI could have “far-reaching and unjustifiable” consequences for super funds.
“It’s our considered view that the NALI rules go much further than originally intended. For example, there could be situations where all the income received by an SMSF, including taxable contributions and realised capital gains, is taxed at 45% because the SMSF failed to incur a small fund expense on arm’s length terms.
“There could also be situations where all the income an SMSF receives from a particular investment, including any realised capital gains on selling the investment, is forever tainted as NALI because of a simple oversight.”
He added any rules should be applied retrospectively from 1 July, 2018.
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
Recommended for you
The super fund announced that Gregory has been appointed to its executive leadership team, taking on the fresh role of chief advice officer.
The deputy governor has warned that, as super funds’ overseas assets grow and liquidity risks rise, they will need to expand their FX hedge books to manage currency exposure effectively.
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
