CPA Australia has announced its support for the federal government’s capital gains tax (CGT) and trust tax changes, while warning that unresolved design issues could create problems for small businesses and their advisers.
CPA Australia Tax lead Jenny Wong said the prime minister and treasurer’s announcements largely address industry concerns and are “heading in the right direction” as small businesses confront ongoing cost pressures and economic uncertainty.
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The body welcomed the proposed lift in the eligibility threshold for the 50% active asset CGT reduction from A$2m ($1.4m) to A$10m.
Wong said: “These are generally positive announcements by the prime minister and Treasurer Jim Chalmers.
“Lifting the threshold for the active asset reduction is a significant and welcome change that should allow more small and medium-sized businesses to benefit from that CGT concession.”
However, CPA Australia questioned why the higher threshold applies to only one of the four small business CGT concessions, warning this could increase inconsistency and complexity.
The organisation also backed indications that ministerial discretions will be reduced under the revised CGT framework.
It also supported the government’s move to exclude discretionary testamentary trusts from the proposed minimum tax on trusts, calling this a “sensible refinement”.
On start-ups, CPA Australia said the proposed tax concession for “innovative” businesses is too narrowly framed, leaving many ventures still exposed to tax.
Wong said the changes show that the government is responding to stakeholder input, including CPA Australia’s Federal Budget submission and evidence to the Senate Economics Legislation Committee.
However, she added that significant design and implementation issues remain, particularly in the draft legislation.
CPA Australia’s concerns include missing details on who will be taxed, at what rate, and on which assets, unclear interaction with existing rules for deceased estates, CGT rollovers and private company dealings.
It also raised concerns around heavy compliance burdens for taxpayers and advisers.
