ATO Administrative Approach for 2019-2020 Income Years
The Australian Taxation Office (ATO) has released its administrative approach for the 2019 and 2020 income years, addressing the treatment of general expenses for the purposes of the Non-Arm's Length Income (NALI) provisions.
Key Points:
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Release of PCG 2019/D6: Alongside the issuance of LCR 2019/D3, the ATO released PCG 2019/D6 to outline its compliance approach regarding the treatment of general expenses concerning NALI provisions.
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Clarification on Non-Arm's Length Expenditure: The ATO emphasizes that trustees of complying superannuation funds may not have realized that the amendments will apply to non-arm's length expenditure of a general nature with a sufficient nexus to all ordinary and/or statutory income derived by the fund in an income year. This clarification was necessary as it was not explicitly addressed by the former LCR 2018/D10.
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Applicability of Rules: The non-arm's length expenditure rules came into effect from 1 July 2018. If the ATO's views are accurate, these amendments may result in all income derived by a fund during the 2019 and 2020 income years being classified as NALI if the fund has incurred non-arm's length expenditure of a general nature.
Conclusion:
The release of PCG 2019/D6 provides clarity on the ATO's administrative approach regarding general expenses for complying superannuation funds. Trustees and tax professionals should review and understand these guidelines to ensure compliance with NALI provisions for the specified income years.
For further assistance, you can reach out to Tax Ideas Accountants & Advisers at
+61 2 83181545 or book an appointment via live calendar.
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