SMSF – ATO finalises its position in relation to event-based reporting
After detailed consultation with the self-managed super fund (SMSF) sector, the ATO announced today that its i
In the 2016-17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.
From 1 July 2016, the tax discount will increase to 8 per cent, remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024-25, 13 per cent in 2025-26 and reach a new permanent discount of 16 per cent in 2026-27.
The increases will coincide with staggered cuts in the corporate tax rate to 25 per cent. The current cap of $1,000 per individual for each income year will be retained.
The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity.
From 1 July 2016, the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.
The ATO will accept all tax returns as lodged during the period up until the law change is passed by Parliament.
If the new law is enacted as expected, taxpayers who did not claim the offset will need to review their positions for the 2016-17 income year and seek amendments. If a reduction in liability results, interest on overpayment will be paid.
If the new law is not enacted as expected, those taxpayers who incorrectly claimed the offset will need to seek amendments. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.
This change is not yet law and is subject to the normal parliamentary process.