In addition to the “general” non-arm’s length income provisions, special rules apply to distributions from a trust to a complying superannuation fund.

The non-arm’s length income (NALI) provisions contained in s 295-550 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) can apply to income of a superannuation fund through either direct or indirect investments. An important type of NALI to be aware of when structuring superannuation fund investments is where the fund invests in a unit trust which does not meet the definition of a “fixed trust” for NALI purposes.

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