The ATO advises that on 21 March 2012 the Tax Laws Amendment (2011 Measures No 9) Act 2012 received Royal Assent.
The legislation amends the financial supply provisions of the goods and services (GST) law to clarify the legislation as well as reduce compliance and administrative costs, particularly for small businesses.
These changes come into effect from 1 July 2012.
The measures include:
- increasing the financial acquisitions threshold input tax credit test from $50,000 to $150,000
- allowing small businesses that account on a cash basis to access full input tax credits upfront when they enter into hire purchase arrangements
- excluding bank deposit accounts from the current special rules for borrowings.
A regulation to implement the remaining measures also comes into effect from 1 July 2012. This regulation:
- simplifies the treatment of hire purchase by making it fully taxable
- expands the range of expenses qualifying for a reduced input tax credit
- limits reduced input tax credits for trustee services
- clarifies the language used in relation to guarantees and indemnities.