08 April 2021 16 minute read
One key criticism of the draft Law Companion Ruling 2019/D3 (
Draft LCR) is the breadth of the ATO’s view in relation to the “nexus” required between the scheme and the loss, outgoing or expense that can constitute non-arm’s length income (
NALI) under s 295-550 of the
Income Tax Assessment Act 1997 (Cth) (
ITAA 1997).
The ATO’s view is that where an expense is incurred by a fund that is less than an arm’s length amount, all of a fund’s ordinary income and statutory income is NALI, which (after relevant expenses) is taxed at 45 per cent.