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Recent Amendments Clarify Treatment of SMSFs Incurring Non-Arm's Length Expenditure

Background:

Recent amendments to Section 295-550 clarify the treatment of non-arm's length expenditure for SMSFs. These changes aim to address situations where SMSFs incur expenditure that's lower than what would have been expected under arm's length dealings.

Key Points:

1. Expanded Definition of NALI:

2. The definition of non-arm's length income (NALI) now includes arrangements where SMSFs incur expenditure below what would be expected under arm's length dealings. This applies to income derived on or after July 1, 2018, regardless of when the scheme was entered into.

3. Two Scenarios Covered: The amendments capture two scenarios:

   • When SMSFs incur a loss, outgoing, or expenditure in gaining or producing income, and the amount is less than expected under arm's length dealings.
   • When SMSFs don't incur a loss, outgoing, or expenditure that would have been expected under arm's length dealings.

Seek Expert Advice:

For any queries or clarification regarding the recent amendments and their impact on SMSFs, feel free to contact Tax Ideas Accountants & Advisers at +61 2 83181545, or book an appointment through our live calendar.

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