Tax in 2007: An eventful year in review — opportunities for you and your clients

New legislation — small business tax concessions

On 1 July 2007, amendments to the small business tax concessions regime of the Income Tax Assessment Act 1997 commenced. Many of the important threshold tests for small businesses changed, as did some of the relevant exemptions.

In addition, new tax rates took effect, including the following:

• an increase in the 30% threshold from $25,001 to $30,001;
• the low income tax offset increased from $600 to $750, to phase out from $30,000; and
• an increase in the threshold below which taxpayers are eligible for the full low income tax offset, from $10,000 to $11,000.

In addition, legislation allowing easier access to small business tax concessions was also introduced — most of which was effective from 1 July 2006. These included lower threshold tests allowing more individuals and businesses to qualify as small businesses. The key changes are summarised in our full article here.

Victorian land tax cuts

2007 saw the Victorian Government reduce Victorian land tax rates and increase the tax-free threshold.

Further, for those occupying primary production land in the Melbourne metropolitan area, special land tax was abolished:

• bringing metropolitan farmers in line with regional Victorian farmers and
• allowing them to change the use of their land without incurring special land tax.

For more information regarding the new land tax rates and what the abolition of the special land tax means for you and your clients, see the full article here.

Division 7A deadline — 30 June 2008 — a Cleardocs solution

Taxpayers are reminded that 30 June 2008 marks the end of the ATO's grace period allowing 'corrective measures' to be taken to avoid penalties and double-taxation of deemed dividends under Division 7A of the Income Tax Assessment Act 1936 (Cth).

Cleardocs provides a solution in its Div7A Loan Agreement, which includes the option to have the agreement cover payments already made to company shareholders or associates. This can be accessed here.

Further explanation of the grace period and appropriate 'corrective measures' can be found in our full article here.