08 April 2021 — 16 minute read One key criticism of the draft Law Companion Ruling 2019/D3 ( Draft LCR) is the breadth of the ATO’s view in relation to the “nexus” required between the scheme and the loss, outgoing or expense that can constitute non-arm’s length income ( NALI) under s 295-550 of the Income Tax Assessment Act 1997 (Cth) ( ITAA 1997). The ATO’s view is that where an expense is incurred by a fund that is less than an arm’s length amount, all of a fund’s ordinary income and statutory income is NALI, which (after relevant expenses) is taxed at 45 per cent.