Contact: Vessa Playfair
Deloitte
Director of Communications
+61 (0) 419 267 676

Contact: David Pring
Deloitte
Partner
+61 (0) 2 9840 7311

More family businesses operated through trusts or companies, will now gain significant CGT concessions following yesterday’s budget, said David Pring, a tax partner at Deloitte.

The concessions are projected to save family businesses $90 to $100 million annually.

“Under the previous system, business owners had to hold at least 50 per cent of the business to qualify,” said Mr Pring.  “Now they only need to hold 20 per cent.

“For example, where a retail store is held 40 per cent by mum, 40 per cent by dad and 20 per cent by one of the children, all three family members will now qualify for the concession.  Previously, no one would have qualified.

“As another example, a marina owned by two couples, with each spouse holding 25% of the business, will now qualify for the full concessions.

“The rules will also simplify business succession planning for aging business owners by allowing family members to own interests as low as 20 per cent and still qualify for the concessions.

“Many small businesses that are administered by the ATO’s Small Medium Enterprise (SME) unit, which deals with businesses with up to $100 million in income, still will not qualify for the concessions,” Mr Pring said.

“They will consider that the changes do not go far enough,” he said.

“The concessions will only apply to businesses with net assets of less than $6 million, where it was previously $5 million.

“However, the changes will be welcome by the small business community and will increase equity and fairness,” said Mr Pring.