The industry has reacted to the Government’s consultation on non-arms length income.
Earlier this week, the Government said it would consult with industry stakeholders on the appropriate operation of the non-arms length income (NALI) and expense provisions following industry feedback.
Tony Negline, CA ANZ superannuation leader, said NALI had been an issue as far back as September 2019.
“Since an Australian Taxation Office (ATO) ruling was first issued on this law as a draft in September 2019, the accounting and finance industry have spent over two years asking the Government for the law to be narrowed to its original intent.
“There are major consequences for minor errors which means that solutions would have had to be worked through very carefully requiring considerable time and expertise.
“The law and ATO ruling has been a dark cloud over the profession’s head who have been waiting with bated breath for the storm.
“This announcement provides an umbrella of hope that there will be more certainty and specific interpretation to these rules for super funds.”
Self-Managed Super Fund (SMSF) Association deputy chief executive and director of policy and education, Peter Burgess, said NALI could have “far-reaching and unjustifiable” consequences for super funds.
“It’s our considered view that the NALI rules go much further than originally intended. For example, there could be situations where all the income received by an SMSF, including taxable contributions and realised capital gains, is taxed at 45% because the SMSF failed to incur a small fund expense on arm’s length terms.
“There could also be situations where all the income an SMSF receives from a particular investment, including any realised capital gains on selling the investment, is forever tainted as NALI because of a simple oversight.”
He added any rules should be applied retrospectively from 1 July, 2018.
Michael Lovett, who left the investment firm just three months after launching its Vanguard Super offering, has taken up a chief executive role at an Australian asset manager.
The Central Bank of Ireland has granted the approval of Equity Trustees’ exit from its Irish operations, with the transaction expected to be complete on 30 April.
Super returns continued to climb in March, raising hopes of delivering double-digit returns by June depending on the performance of this next quarter.
The dedicated super fund for emergency services and Victorian government employees is under fire for unpaid entitlements to transport employees, which could exceed $40 million.
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