Retirement & wealth Superannuation Consultation

Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 [Provisions]

Published Date: 30 Oct 2023


Sorry, this is subscriber only content.

If you're not yet a subscriber, to gain access to this material and much more - Subscribe Now.

Already a Subscriber? Login now

Already a Subscriber? Login now

Chartered Accountants Australia and New Zealand, CPA Australia, Institute of Public Accountants, SMSF Association, The Tax Institute and the Financial Advice Association Australia (together, the Joint Bodies) welcome the opportunity to provide feedback on the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 (the Bill) which was introduced into Parliament on 13 September 2023. Our comments relate solely to the proposed non-arm’s length expenses (NALE) rules for superannuation funds contained in Schedule 7 to the Bill. We do not comment on the other parts of the Bill in this submission.

The Joint Bodies do not endorse the measures contained in Schedule 7 to and recommend its removal from the Bill.

The policy proposed to be implemented by Schedule 7 to the Bill aims to alter, rather than eliminate, measures that were put in place to address concerns that are now outdated. This will result in a ‘two-tiered’ superannuation system. Additionally, the Bill fails to address issues arising from the interplay between the non-arm’s length income (NALI) provisions and the NALE framework for superannuation funds and specific expenses.

On 21 February 2023, the Joint Bodies, together with other professional associations, wrote to the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP, in response to the Consultation Paper on Non-arm’s length expense rules for superannuation funds released in January 2023 (Consultation Paper). In our submission, the Joint Bodies suggest a simpler, more effective long-term solution than what is proposed by the Bill, and which would eliminate continuing concerns.

The current provisions concerning NALI/E in section 295-550 of the Income Tax Assessment Act 1997 (ITAA97) were amended in 2019, taking effect from 1 July 2018. These changes extended the NALI provisions to specifically address NALE incurred by a superannuation fund.

Initially, the NALI policy aimed to impose income tax penalties on superannuation funds involved in non-arm’s length transactions. It was not intended to by-pass contribution caps, as implied in the Consultation Paper released in January this year. Likewise, it was not designed to permit superannuation fund members to exceed their transfer balance cap.

It is crucial to prioritise efficiency, equity, and simplicity when formulating tax laws and policy. The Joint Bodies recognise that there is often a trade-off among these principles. For instance, dealing with an integrity issue may necessitate complex rules, and a judgment must be made on whether the benefits of including an integrity rule outweigh the costs of increased complexity in administering that rule. Above all, equity should not be compromised when implementing integrity measures.

Since the legislative changes were made in 2019, the current NALI/E regime has raised considerable concerns across the superannuation industry, as recognised in the media release from the Assistant Treasurer issued 24 January 2023.

For the past three years, the superannuation sector, tax professional associations and industry, have strongly advocated for these concerns to be addressed, recognising that these rules are potentially detrimental to the retirement savings of Australians.

Our feedback on the proposed measures outlined in the Bill is detailed below. We continue to advocate for a resolution that upholds the principles of sound policy and law design, ensuring that adequate safeguards are in place and appropriate penalties can be enforced.


  • Published On:30 Oct 2023

The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))


The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

Copyright Statement

All materials provided on this site are protected by copyright and are owned by or licensed to TTI.

Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.


Retirement & wealth Superannuation Consultation Contributions Earnings and benefits (pensions and lump sums)

Share this page