Small business restructure relief

The following announcements were made to encourage entrepreneurship and the establishment of small businesses.  These announcements were: –

1. Small businesses may change the legal structure of their business without attracting a capital gains tax (CGT) liability from the 2016/17 income year. This measure will be available for small businesses with an aggregated annual turnover of less than $2m. It will enable small businesses to alter their legal structure as they find suitable without being impeded by potential CGT implications.

Currently, CGT roll‐over relief is available for individuals, trustees or partners in a partnership that incorporate as a company.

A review of the legislation will be required before restructuring relying on this announcement.  There is some speculation that restructuring the business by transferring it into a trust structure may require the trust to be established as a fixed trust which does not allow flexibility in distributing the income.

2. Streamlining the business registration processes by establishing a single online portal (business.gov.au) developed for business registration and company registration, making it quicker and simpler to set up a new business. A start up business will no longer need an Australian Company Number or business Tax File Number but can use its Australian Business Number to interact with the ATO and ASIC. The new portal (expected to be implemented by mid‐2016) will provide all the relevant information and have integrated customer support, and
3. Consultation aimed at developing a regulatory framework to facilitate the use of crowd‐source equity funding will be implemented, including simplified reporting and disclosure requirements, to help small businesses access innovative funding sources.
4. An immediate deduction will be available for professional expenses that are associated with starting a new business, such as professional, legal and accounting advice or legal expenses to establish a company, trust or partnership. The deduction will be available to start‐up businesses from the 2015/16 income year. Currently, such expenses are deductible over five years under s 40‐880 of the Income Tax Assessment Act 1997, the blackhole expenditure provision.