The changes include limiting the amount of NALI arising from a non-arm's length general expense for small superannuation funds to twice the difference between the actual expense and the expected market rate of the expense.

Additionally, the changes now also exempt large APRA-regulated funds from the non-arm's length expenditure (NALE) provisions for general and specific expenses of the fund, and confirm the remaining NALI rules continue to apply.

Furthermore, there is an exemption to the application of the NALE provisions, as amended by the Act, for expenditures that occurred before the 2018–19 income year.

These changes apply retrospectively from 1 July 2018 and as such trustees will need to consider any impacts to their fund and report any non-arm's length general expenses per the new law.

The ATO’s administrative approach in PCG 2020/5: Applying the non-arm’s length income provisions to ‘non-arm’s length expenditure’ expired on 30 June 2023 and will not be extended given the passing of the new legislation.