Government Announcements
Division 7A changes
14.09.2009
In a statement issued on 14 September 2009, the Assistant Treasurer released the post-consultation details of the 2009-10 Budget measure to tighten the non-commercial loan rules in Div 7A ITAA 1997.
Submissions were received in the consultation process to the effect that genuine farming businesses and those small businesses that include a residence located at the business itself may have been unintentionally impacted. The Government has decided that the non-commercial loans measure will now include:
- an “otherwise deductible rule” for certain payments – any “business use” assets (that is, not for private purposes) that are provided to a shareholder under a right-to-use or a licence (but not a lease of real property) will be disregarded from the amount of any “payment” made to shareholders as they will be deemed to be otherwise deductible; and
- a “residence exemption” for certain payments – any residence that is an integral part of the business real property and is owned by a private company but is lived in under a right-to-use or a licence as part of the carrying on the business is disregarded.
Exposure Draft legislation of the Div 7A amendments will be released shortly for public consultation.
For the text of the Assistant Treasurer’s media release, click here.
