Ralph review heralds serious red tape cutting

The Ralph Review heralds a sea change in the way small business interacts with the tax system, according to the Australian Society of Certified Practising Accountants (ASCPA).

“The government appears to have heeded calls from small business drowning in red tape,” ASCPA tax director Angela Ryan said.

“The rollover relief available for small business under the capital gains tax is all that we asked for in our submission to Ralph and more.

“Small businesses can now access more than one relief measure for any one disposal. Small businesses will be eligible for a 50 per cent exclusion from capital gains tax, a 50 per cent active assets exemption on the balance of the capital gain, an ability to elect to roll the remaining 25 per cent of the gain into replacement assets or to apply the remaining 25 per cent towards the $500,000 capital gains tax retirement exemption.

“Small business taxpayers will also be exempt from capital gains tax where active assets are held for fifteen years or more, and the taxpayer is aged more than fifty-five.

“Taken together, these capital gains tax reforms will make investment in a small business a much more attractive proposition, and should assist in the growth and employment generating capacity of the economy as a whole – the sort of efficiency gains the Ralph Review was aiming for.

“In addition, the headache of complying with the tax system for many small businesses should be reduced when the Simplified Tax System takes effect from 1 July 2001. There is therefore a breathing space to concentrate on GST and PAYG reforms before tackling this new system.

Ms Ryan said that there will be a simplified depreciation regime, including access to a pooling arrangement for assets with effective life of less than twenty-five years and immediate write-off for assets costing less than $1,000 – up from the current $300.

Simplification to the trading stock rules mean many fewer small businesses will need to undertake an annual stocktake.

“We are pleased the entity tax regime which will apply to all trusts has been deferred to 1 July 2001 and we are hopeful that continuing consultation will see that sensible carve outs can still be negotiated for family trusts.

“It is clear that the small business sector has finally gained a voice in tax reform,” Ms Ryan said.

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