BUDGET 09-10: Tax breaks, limited CGT relief for SMEs

Businesses will benefit from increased investment allowance and limited CGT relief contained in last night's Budget

Businesses will benefit from the Federal Government’s increased investment allowance and limited Capital Gains Tax (CGT) relief contained in the recent Budget, according to professional services firm Deloitte.

Treasurer Wayne Swan revealed in last night’s Budget that tax breaks will be increased on assets purchased by businesses with a turnover of less than $2 million.

Deloitte tax partner David Pring says this is a good initiative for stimulating productive capacity for small businesses.

"Small businesses now have the opportunity to claim an additional deduction of 50 percent on all assets purchased between 13 December 2008 and 31 December 2009," he says.

For small businesses, this expands the previously announced measures where SMEs would otherwise have qualified for a 30 percent additional tax deduction.

The Government’s proposal to provide a limited CGT roll-over where assets are transferred between fixed trusts is also being welcomed by Deloitte.

Deloitte tax partner Spyros Kotsopoulos says this is a positive measure that will allow assets to be transferred without triggering a CGT liability.

"Oddly enough this measure appears to go in the opposite direction to recent changes to tax law preventing taxpayers from cloning of trusts and transferring assets between the relevant trusts. In effect this roll over allows for the "cloning" of unit trusts," he says.

"From a policy perspective it is difficult to understand why the same principle should not be applied to discretionary trusts.

"It would seem sensible to allow for a roll over in respect of a transfer of an asset between two discretionary trusts where the beneficiary class is the same."

These measures will have effect from November 1, 2008, and will be accompanied by appropriate integrity rules.

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