15 July 2005 
 
The Institute of Chartered Accountants has welcomed the announcement today by the Minister for Revenue and Assistant Treasurer, the Hon Mal Brough MP, on changes that will simplify the debt/equity rules for related party ‘at call’ loans made to small companies.  
 
The Institute said the changes are a big win for small businesses as they will now have only one test to apply in determining whether the debt/ equity rules apply to their at call loans. In broad terms, companies will be able to treat at call loans as debt interests for income tax purposes if they have an annual turnover of less than $20 million. The Institute had previously pushed for the adoption of this test in a previous submission on the debt/equity rules.  
 
“Small business has struggled with provisions that are complex and costly to comply with so today’s announcement is welcome because provides simpler, more certain rules for those businesses and eases the compliance burden,” said Institute Public Affairs Manager, Mr Bill Palmer.  
 
The announcement also includes changes to resolve a technical deficiency with the debt/equity rules that may have resulted in an at call loan being treated as equity from 1 July 2005 notwithstanding changes to convert the loan to debt before that date.  
 
“The Institute endorses these changes as a sensible approach to providing more certainty and freeing small business from the scope of the debt/ equity rules that are really designed to apply to larger companies with more complicated financial arrangements,” Mr Palmer said.