Key federal budget announcements on the Institute’s radar

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Key federal budget announcements on the Institute’s radar

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	Key points Changes to Division 7A announced in the federal budget have a direct impact for many rural and regional members The Institute is lobbying government on the adverse impact the changes will have on the rural sector Rural members are reminded of the major change to the investment allowance allowing small businesses a 50 per cent tax deduction of eligible assets.

Changes to Division 7A
In this years Federal Budget the government announced that from 1 July 2009 it would extend the operation of the existing Division 7A rules such that shareholders (or their associates) who use private company assets, such as real estate or cars for free or at a discounted rate, would be subject to the deemed dividend rules. This announcement would have a direct impact on rural farmers in certain circumstances. In this regard, the Institute has been liaising with rural members and is making representations to government concerning the adverse impact this announcement has for the rural sector.

Tax Laws Amendment Bill 2009 receives Royal Assent
Tax Laws Amendment (Small Business and General Business Tax Break) Bill 2009 with government amendment was passed by both Houses of Parliament and received Royal Assent on 22 May 2009.

The major change to the legislation increases the rate of the one-off bonus tax deduction (investment allowance) available to small businesses to 50 per cent where a small business acquires an eligible asset between 13 December 2008 and 31 December 2009, and the asset is installed or ready for use by 31 December 2010.

The extension to the tax break was announced by the Treasurer in the Budget on 12 May 2009. The previously announced 30 per cent and 10 per cent tax breaks (and timeframes) will apply to all other businesses.

The amendments are on the parliament website as is the supplementary explanatory memorandum. The Bill and Explanatory Memorandum are available on the parliament website.

Treasury has also updated its Frequently Asked Questions document and the ATO has released a Frequently Asked Questions Guide to small business and general business tax break together with an Overview: small business and general business tax break.

Relevant links:

The Institute: Business and General Business Tax Break (Investment Allowance)

The Institute: 2009/10 Federal Budget taxation announcements

Australian government: Small Business Tax Break Boost