Government Announcements
2009-10 Budget: integrity measures
12.05.2009
It was announced in the context of the 2009-10 Budget that amendments would be made to improve the integrity of the tax system in the following respects:
- closing (from and including the 2009-10 income year) a tax loophole that allows a relatively small number of mostly high wealth individuals to exploit parts of the tax system to unfairly minimise or avoid their tax obligations. Specifically, the ability for high income individuals to deduct losses from unprofitable business activities against their own income will be removed by tightening the rules in the income tax law applying to the use of non-commercial losses;
- tightening (from the including the 2009-10 income year) the Div 7A rules to remove the scope for private companies to allow company assets (such as real estate, cars and boats) to be used for free or at less than their arm’s length value without paying tax. By contrast, the same use of the asset by an employee – rather than a shareholder – would attract fringe benefits tax. However, from 1 July 2009 the Government will remove this inconsistent treatment, helping to ensure that shareholders pay their fair share of tax;
- taking steps to prevent taxpayers from avoiding paying tax on distributions from closely-held trusts. From 1 July 2010, closely-held trusts will need to withhold amounts from trust distributions at the top marginal tax rate where taxpayers have not provided a tax file number to the trustee.
For the text of the media release, click here.
