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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Capital gains tax (CGT) - extension of small business concessions

    The tax law now allows access to the small business CGT concessions to:

    • taxpayers owning a CGT asset used in a business by a related entity, and
    • partners owning a CGT asset used in a partnership business.

    For more information, visit our website at or phone the Business Infoline.

    CGT - further amendments to the small business concessions

    The Government has introduced a transitional rule that will extend the time for taxpayers to choose to access the small business concessions, where CGT events happen before 23 June 2009. Under the transitional rule an entity must choose by the latest of: the date it lodged its tax return for the year in which the CGT event happened, 23 June 2010 or a later day allowed by the Commissioner.

    The concessions for assets acquired on the death of an individual will be extended to cover assets that have passed to a trust established by the will of the deceased individual, provided that the individual would have been able to access the concessions at the time of their death. This extension will apply to CGT events that happened in the 2006-07 and later income years.

    The provisions which treat certain distributions to entities connected with a private company as dividends will be excluded from applying to the small business CGT retirement exemption. This exclusion applies from 23 June 2009.

    Non-commercial business losses

    A new income test applies to the non-commercial business loss rules from 2009-10. If you meet the income test you will continue to have access to the four tests to allow your loss from a business activity. If you do not meet the income requirement you cannot access the four test, you may request that the Commissioner of Taxation exercises his discretion to allow your loss.

    A rule has also been introduced allowing you to claim a loss from your business activity if it has been created solely because of deductions you claimed under the small business and general business tax break for the 2009-10 or later year.

    CGT - look through treatment for earnout arrangements

    In the 2010-11 Budget the Government announced that it will allow all payments under a qualifying earnout arrangement to be treated as relating to the underlying business asset. The measure will take affect once the legislation is passed, with transitional provisions available in certain cases from 17 October 2007. Earnout arrangements structure the sale of business or business assets to manage uncertainty about the value of the business. The current tax treatment can result in anomalous outcomes for taxpayers where the actual payments under the earnout right differ from the amounts estimated at the start of the arrangement.

    At the time of printing these instructions the changes had not become law.

    CGT - extension of roll-over for changes to water entitlements

    The Government is extending the capital gains tax (CGT) roll-over for transformation arrangements to any capital gains or losses arising from changes to water entitlements to include pre-transformation transactions. Transformation is the process by which an irrigator permanently changes their right to water against an irrigation infrastructure operator into a statutory licence held by an entity other than the operator. The measure takes effect from the 2005-06 income year with transitional provisions applying until the measure becomes law.

    Currently, pre-transformation changes could trigger immediate CGT liabilities for parties dealing with water entitlements. Operators may undertake pre-transformation transactions to ensure irrigators are treated equitably during the transformation process. This measure will enable taxpayers to defer any CGT consequences arising from the replacement of their water entitlements with one or more different water entitlements.

    At the time of printing these instructions the changes had not become law.

    Superannuation - minor amendments

    In the 2010-11 Budget the Government announced the intention to make a number of minor amendments to improve the operation of the superannuation legislation. These changes are intended to take effect from the 2010-11 income year. The amendments will include:

    • permanently allowing a claim for a deduction for eligible contributions to be made to successor superannuation funds
    • increasing the time limit for deductible employer contributions made for former employees.

    The proposed changes do not affect your tax return for this year. At the time of printing these instructions the changes had not become law. For more information visit

    Last modified: 25 Oct 2011QC 27987