LCR2019/D3

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ATO partially softens its view on non-arm’s length expenditure

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ATO partially softens its view on non-arm’s length expenditure

After seeking advice from an independent advice panel, the ATO has released its finalised Law Companion Ruling setting out the ATO view on the non-arm’s length expenditure (NALE) amendments to section 295-550 of the Income Tax Assessment Act 1997 (ITAA97), LCR 2021/2. In addition, the ATO has amended its contribution tax ruling TR 2010/1. The final LCR and amendments to TR 2010/1 partially soften the ATO views on the application of NALE.

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Sladen snippet - ATO extends transitional compliance approach to NALE for another financial year

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Sladen snippet - ATO extends transitional compliance approach to NALE for another financial year

As previously discussed here, the definition of non-arm’s length income (NALI) under the Income Tax Assessment Act 1997 was amended in mid-2018 to include non-arm’s length expenses or NALE. NALE includes not just an expenditure, but also a loss or outgoing that is lower than an arm’s length amount, and also includes where there is a nil amount (ie, no expenditure).