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ARTICLE · 13 JUNE 2018

Changes to non-arms length income (NALI) rules for SMSFs

Cooper Grace Ward
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SMSFs pay tax on NALI at the top marginal tax rate, rather than usual concessional rates that apply to income earned in SMSFs.

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Scott Hay-Bartlem
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SMSFs pay tax on 'non-arm's length income' (NALI) at the top marginal tax rate, rather than the concessional rates that usually apply to income earned in SMSFs.

The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 has been introduced to extend NALI to include where the SMSF has entered into an arrangement where the parties are not dealing at arm's length and either:

  • the SMSF's expenses are less than would have been incurred had the parties been dealing at arm's length; or
  • there is no loss, outgoing or expense incurred by the SMSF where one would have been expected if the parties had been dealing at arm's length.

If passed, the new rules will apply from 1 July 2018.

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