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15 Apr 14 Addenda to TD 2007/14 (Div 152 small business concessions and liabilities)

On 14 April 2014, the ATO issued the following addendum to TD 2007/14:

  • TD 2007/14A1 - Income tax: capital gains: small business concessions: what 'liabilities' are included in the calculation of the 'net value of the CGT assets' of an entity in the context of subsection 152-20(1) of the Income Tax Assessment Act 1997?

The addendum reflects changes made by Tax Laws Amendment (2006 Measures No 7) Act 2007 to amend s 152-20(1) ITAA 1997 to:

  • allow a negative net value of the CGT assets of an entity to be calculated, and
  • allow the following provisions to be taken into account in determining the net value of the CGT assets of an entity:
    1. provisions for long service leave
    2. provisions for annual leave
    3. provisions for unearned income
    4. provisions for tax liabilities.

The addendum applies to CGT events happening in the 2006-07 income year or later income years.

On 14 April 2014, the ATO issued the following addendum to TD 2007/14:

  • TD 2007/14A2 ( Income tax: capital gains: small business concessions: what 'liabilities' are included in the calculation of the 'net value of the CGT assets' of an entity in the context of subsection 152-20(1) of the Income Tax Assessment Act 1997?)

The addendum reflects changes made by Taxation Laws Amendment (Small Business) Act 2007, which:

  • increased the maximum net asset value test threshold in s 152-15 of ITAA 1997 from $5 million to $6 million,
  • replaced the term 'small business CGT affiliate' with 'affiliate', moved its definition from s 152-25 of ITAA 1997 to s 328-130 of ITAA 1997 and changed its meaning in some respects, and
  • enacted the small business entity ($2 million turnover) test as an alternative to the maximum net asset value test as a means of qualifying for the small business capital gains tax concessions.

The addendum applies to CGT events happening in the 2007-08 income year or later income years.

On 16 April 2014, the ATO issued the following addendum to TD 2007/14:

  • TD 2007/14A3 ( Income tax: capital gains: small business concessions: what 'liabilities' are included in the calculation of the 'net value of the CGT assets' of an entity in the context of subsection 152-20(1) of the Income Tax Assessment Act 1997?)

It amends Taxation Determination TD 2007/14 to include the Commissioner's view of the implications of the Full Federal Court decision of FCT v Byrne Hotels Qld Pty Ltd [2011] FCAFC 127.


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