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The Government has introduced draft legislation into Parliament (Treasury Laws Amendment (Tax Integrity and Other Measures) Bill 2018) in relation to proposed amendments to the Small Business CGT concessions to include additional integrity measures.
The draft legislation is broadly in line with the previous exposure draft legislation (discussed in this previous Blog). However, a couple of welcome changes include:
- There is no longer a requirement for the object company or trust to be carrying on a business just before the relevant CGT event in relation to the shares or units in the object company or trust (which was problematic where the company or trust had sold the business shortly before returning capital to shareholders or unitholders); and
- The modified Active Asset Test has been relaxed in that financial instruments and cash of the object company can be positively included in the 80% Active Asset calculation where they are inherently connected with the relevant business, so long as they were not acquired for a purpose that included satisfying the modified Active Asset Test (so this is effectively a specific integrity measure).
The amendments are still proposed to apply retrospectively from 1 July 2017.