Proposed Amendments to the Tax Law
The Federal Government has introduced Tax Laws Amendment (2009 Measures No 2) Bill 2009 into Parliament. The amendments contained in the Bill include:
- increasing access to the small business CGT concessions for taxpayers owning a CGT asset used in a business by an affiliate or entity connected with the taxpayers, and for partners owning a CGT asset used in the partnership business;
- providing a general exemption from CGT for capital gains arising from a right or entitlement to a tax offset, deduction or similar benefit; and
- exempting from tax the Clean-up and Restoration Grants paid to small businesses and primary producers affected by the recent Victorian bushfires.
Small business CGT concessions
The Bill will allow a taxpayer who holds a passively held CGT asset which is used in a business by the taxpayer’s affiliate or a connected entity to access the small business CGT concessions, subject to certain conditions.
The Bill will also allow partners in a partnership to access the concessions for CGT assets owned by the partners that are used in the business of the partnership but are not interests in assets of the partnerships, provided certain requirements are satisfied.
Further, the Bill will refine and clarify aspects of the existing small business CGT concessions, including:
- expanding the range of circumstances when a taxpayer’s spouse or child will be considered to be an affiliate of the taxpayer;
- exempting small business operators from satisfying the basic conditions for capital gains arising from certain CGT events;
- ensuring the small business CGT retirement exemption applies appropriately to capital proceeds received by individuals in instalments.
The Bill will also clarify that a partner in a partnership cannot be a small business entity.
Generally, the amendments will apply to CGT events happening in 2007/08 and later income years.
Tax benefits and capital gains tax
The Bill will ensure that a capital gain or loss that a taxpayer makes from a CGT event arising from a tax offset, deduction or similar benefit will be disregarded.
For example, the exemption will apply if a taxpayer has a right to receive a reduction in land tax available under an Australian law.
The amendment will apply to the 2009/10 and later income years.
Tax exemption for certain grants
