Instant asset write-off extended
The immediate write-off of depreciable assets costing less than $20,000 purchased by small business entities (with an aggregated turnover of less than $10m) was due to expire on 30 June 2018.
The concession has been extended for a further 12 months to 30 June 2019. The concession has been in place since 12 May 2015 and has been very popular with small business entities, particularly at this time of year.
In conjunction with this extension, the current “lockout” laws for small business depreciation rules (these prevent small businesses from re-entering the small business depreciation regime for 5 years after they opt out) will also not apply until 30 June 2019.
This means that these small businesses can also potentially still access the immediate write-off.
Small business CGT concessions
From 7.30pm on 8 May 2018, the Government proposes to tighten the small business capital gains tax (CGT) concessions to ensure partners that alienate rights to future partnership income will no longer be able to access the small business CGT concessions in relation to these rights.
This is intended to stop the concession being inappropriately accessed in relation to the assignment of a right to future partnership income to an entity, without giving that entity any role in the partnership.
Division 7A UPE rule strengthened
Division 7A is an integrity rule that requires benefits provided by private companies to their associates to be taxed as dividends unless they are made subject to a complying division 7A loan or another exception applies. Since 2009 the ATO has considered that unpaid present entitlements (UPEs) to corporate beneficiaries of a trust (distributions that were made to the company but not paid) may be subject to Division 7A but also subject to special rules.
From 1 July 2019, the Division 7A legislation will be amended to ensure that UPEs come within the scope of Division 7A.
The Government also announced that it would defer the start date of proposed changes to Division 7A announced in the 2016-17 Budget from 1 July 2018 to 1 July 2019.
Circular trust distributions
From 1 July 2019 specific anti-avoidance rules regarding circular trust distributions will be extended to include family trusts.
The measure applies to stop ‘round robin” trust distributions, where a distribution ultimately returns to the original trustee – in a way that avoids tax being paid on that amount. Tax on such a distribution will be imposed at a rate equal to the top personal tax rate plus Medicare.
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