Assistant Treasurer Stuart Robert acknowledged concerns from the profession surrounding Treasury’s consultation paper released last year, noting that his position was “not in line” with Treasury’s view.
“In terms of Div 7A, I’ve finalised my view on it and submitted it to the Treasurer yesterday,” said Mr Roberts in an address to the Tax Institute’s National Convention.
“Suffice to say, the ATO and I are broadly in line and Treasury and I are broadly not in line.
“I think you’ll find where we land is really simple and sensible and more in line with how our tax practitioners see it rather than how Treasury sees it.”
Among some of the controversial proposals in Treasury’s paper is that pre-1997 loans become subject to Division 7A repayments, with a two-year grace period and the first repayment on new 10-year terms due by 30 June 2022, effectively repaid in 12 years after the rules takes effect.
Quoting ATO data provided to him, Mr Robert said that in 2017, there were about 1,700 of such loans, in the value of $1 billion, down from 2,000 in 2015.
“Now a loan, by definition of the word loan, means it should be repaid back at some stage,” said Mr Robert.
“They’ve gone down because for the most part they are put in place by Australians who are now slightly older, who are either passing on or their affairs are being pulled together so those pre-1997 will all wash through the system – what’s required is a hard right shoulder in terms of getting the loan repaid.
“That’s the approach we’re taking, giving you lots and lots of time.”
The Tax Institute, along with other professional associations including CA ANZ and the IPA, have previously expressed concerns of the inclusion of the pre-4 December 1997 loans and pre-16 December 2009 unpaid present entitlements in the revised Division 7A regime, calling for certainty in the upcoming federal budget.
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.