Deloitte partner Liz Westover said that while the government’s announcement was most welcome, there is an upcoming election and there could be a whole new government with a different view on this measure.

“As far as I know, the Labor government does support the changes around NALI and does appreciate that there are some onerous outcomes for unintended misdemeanours but nevertheless, even if we have the same government, we’ve still got to go through a consultation period,” said Ms Westover, speaking at the Tax Institute’s Superannuation Intensive. 

“From that consultation, we’ve got to see the development of legislation, then that legislation has actually got to get through Parliament. So there is a process, it takes time, before we actually see changes.”

In the meantime, Ms Westover said 30 June 2022 would roll around very quickly and there would be some people who “get caught up in the current provisions as they apply”, she warned.

“So, a big warning not to ignore this on the basis that you think change is coming. Change may not come or it may be a long-time coming,” she cautioned. 

While the ATO stated in PCG 2020/5 it would not be allocating compliance resources to determining whether expenses have been charged on arm’s length basis, Ms Westover reminded SMSF professionals that this ends on 30 June. 

The ATO has made it clear that it does not intend to extend the compliance relief in PCG 2020/5 despite the government’s recent announcement. 

“We really need to administer the law as it currently stands, and the scope and the timing of any potential legislative change is really not clear,” ATO SMSF regulatory branch assistant commissioner Justin Micale said speaking at the same event. 

Mr Micale said SMSF professionals should be encouraging clients to only enter transactions on an arm’s length basis.