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Targeting non-commercial loan rules in support of rural communities and small business operators.
TARGETING NON-COMMERCIAL LOAN RULES IN SUPPORT OF
RURAL COMMUNITIES AND SMALL BUSINESS OPERATORS
The Assistant Treasurer, Senator Nick Sherry, has today released the post-consultation details of the 2009-10 Budget measure to tighten the non-commercial loan rules.
"This is an important measure that will improve the fairness and integrity of the tax law, and the final details of the measure deliver this outcome, while addressing the concerns of the farming and small business communities," said the Assistant Treasurer.
The Budget measure will prevent private companies from making "payments" to shareholders using company assets, such as providing access to holiday houses, cars and other luxury items, which are then priced at less than market value and disguised as tax-free distributions.
This loophole arises because a lease of real property is not present in such cases and a "payment" does not arise if only a right-to-use or licence gives access to the company house, boat or other asset. The Budget measure will directly rectify this loophole by
covering licences and rights-to-use.
The Government undertook public consultation following the announcement of the measure and has now clarified aspects of the measure to ensure both the rural and small business communities are not unintentionally impacted.
"After listening to the community - particularly the farming and small business communities - I have agreed to two new features to the measure," said the Assistant Treasurer.
"We received submissions that genuine farming businesses and those small businesses that include a residence located at the business itself may have been unintentionally impacted - so we've listened to those concerns and acted decisively to provide certainty and clarity."
The non-commercial loans measure will now include: