Earlier this year, the government released draft legislation proposing that small business CGT concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business.
The draft legislation, released on 8 February 2018, had a retrospective start date of 1 July 2017, a position that had sparked concerns amongst the tax community because of the lack of clarity during the transition period of the budget announcement and the release of the draft legislation.
In amendments to the bill yesterday, the government has decided to push the start date back to 8 February 2018, the date the draft legislation was released for consultation.
“The bill will be amended to have a start date of 8 February 2018, the date the draft legislation was released for consultation, providing a transition period between announcement and the date of effect,” a spokesperson for the Treasurer told Accountants Daily.
CA ANZ tax leader, Michael Croker, said the amendments were a welcome relief to the community, considering how little information was released in the budget announcement.
“Deals are done in the interim period and businesses are sold in the ordinary course of activity and people have set their sale price by reference to what they think they can get and they factor into negotiations what they think the likely tax outcome would be and their eligibility in particular for small business CGT concessions, and when people saw the level of detail in the 8 February exposure draft, they realised that some of the deals that had been done would not be eligible,” Mr Croker told Accountants Daily.
“When the Treasurer's 2017 budget announcement was made, a lot of people felt that the level of detail on budget night did not convey the intended scope of the measure sufficiently for people to advise accurately to the sales of businesses that occurred in that nine month period so it is a very welcome decision by the treasurer to acknowledge that and say, well the tax community should have been on notice from the 8 Feb and that's fair enough.”
The changes to access to the CGT concession comes as the Board of Taxation conducts a review of the broader suite of small business tax concessions, in a bid to identify ineffectual concessions and potentially recommending new concessionary approaches.
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.