Changes to NALI for SMSFs

The ATO says changes to the non-arm’s length income (NALI) are now law and take effect from 1 July 2024. The new NALI rules for non-arm’s length expenses apply to both SMSFs and small APRA-regulated funds with 6 or fewer members.

The changes:

• limit the amount of NALI arising from a non-arm’s length general expense for small superannuation funds to twice the difference between the actual expense and the expected market rate of the expense
• exempt large APRA regulated funds from the non-arm’s length expenditure (NALE) provisions for both general and specific expenses of the fund, and the NALI rules continue to apply
• exempt the application of the NALE provisions, as amended by the Act, for expenditure that occurred prior to the 2018–19 income year
• apply from 1 July 2018.