Australia: Consultation on non-arm’s length income provisions amendments
Draft bill includes amendments to non arm’s length income provisions announced in 2023 2024 budget
Consultation on non-arm’s length income provisions amendments
Treasury released for consultation a draft bill [PDF 233 KB] that includes amendments to the non‑arm’s length income provisions announced in the 2023‑2024 budget. The consultation closes on 7 July 2023.
The amendments to the non‑arm’s length income provisions would apply to expenditure incurred by superannuation funds, referred to as the non‑arm’s length expense rules.
The draft bill also includes amendments to the Income Tax Assessment Act 1997 that:
- Limit application of the non‑arm’s length expense rules to self‑managed superannuation funds (SMSFs) and small Australian Prudential Regulation Authority regulated funds (SAFs)
- Distinguish between specific and general expenses for the purposes of non‑arm’s length expense rules for both general and specific expenses of the fund
- Set the amount of income taxable as non‑arm’s length income from a general expense breach by an SMSF or SAF as twice the difference between the amount that would have been charged as an arm’s length expense and the amount that was actually charged to the fund
- Limit potential income of the fund taxable as non‑arm’s length income to the fund’s taxable income less contributions and related deductions
- Exempt expenses which were incurred, or might have been expected to be incurred before the 2018‑2019 income year
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