POWERED BY MOMENTUM MEDIA
Bipartisan support needed on NALE rules: SMSF Association
The non-arm’s length expenditure (NALE) rules will have broader consequences on the superannuation sector, resulting in self-managed superannuation funds (SMSFs) being taxed at 45%, according to the SMSF Association.
Speaking at the SMSF Association national conference in Adelaide, deputy chief executive, Peter Burgess, said: “Prior to the introduction of the NALE rules we were certainly not coming across SMSF members who were undercharging for services provided to their fund as a deliberate strategy to circumvent the contribution caps or to artificially inflate the fund’s investment earnings”.
Burgess called for a bipartisan approach to the NALE rules, arguing it was imperative that they were appropriately targeted and fit for purpose.
“In our view, amendments are needed to exempt general expenses from these provisions, and ensure penalties only apply to expenditure shortfall amounts rather than to some or all of the fund’s income,” Burgess said.
One of Burgess’ complaints was the linking of the NALE to some or all of a fund’s income, and then the application of penalties to that income, could give rise to inappropriate and poorly-targeted outcomes.
“Breaking this link and only penalising the shortfall amount is, in our view, an appropriately targeted legislative response,” he said.
“The penalty could be treating the shortfall amount as a taxable contribution or dealing with it through the contributions regime.
“So, the solution may well lie in the amendments the Australian Taxation Office are currently making to contribution ruling TR 2010/1, which is now expected to be released in the second half of 2022”, Burgess said.
Burgess noted that the Government had announced plans to amend the NALE rules to ensure they were operated as intended, an announcement which had been welcomed by the association.
“We were pleased to see this announcement and we look forward to a bipartisan approach to addressing this issue and ensuring the rules work as intended,” Burgess said.
Recommended for you
The lower outlook for inflation has set the stage for another two rate cuts over the first half of 2026, according to Westpac.
With private asset valuations emerging as a key concern for both regulators and the broader market, Apollo Global Management has called on the corporate regulator to issue clear principles on valuation practices, including guidance on the disclosures it expects from market participants.
Institutional asset owners are largely rethinking their exposure to the US, with private markets increasingly being viewed as a strategic investment allocation, new research has shown.
Australia’s corporate regulator has been told it must quickly modernise its oversight of private markets, after being caught off guard by the complexity, size, and opacity of the asset class now dominating institutional portfolios.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
