Loans Now Down As Debt In A Tax Turnaround

THE Federal Government has moved to ease small-business compliance costs by agreeing to treat "at-call" loans as debt under income tax law.

Assistant Treasurer Mal Brough said the changes would apply to companies with an annual turnover of less than $20 million.

The amendments will take effect retrospectively, from July 1 this year, to coincide with the end of the transitional rule for related-party at-call loans.

Private companies with turnover of more than $20 million have also been granted some leeway to reduce compliance costs.

Accounting and finance organisation CPA Australia said the changes would be welcomed with "much relief" by many small-business owners.

The Government had been criticised for delays in passing legislation on exclusions for small business from strict new guidelines on at-call loans.

It meant tax professionals and the Tax Office had to advise taxpayers about the new at-call system without the relevant legislation being in place.

CPA Australia's senior tax adviser, Garry Addison, called for the necessary amending legislation to be introduced into Parliament as soon as possible to "give certainty to small family companies".