The Turnbull government has introduced legislation into parliament aimed at making it easier for small businesses to change legal structures.
The changes mean small business owners wanting to change how their business operates will be able to do so without incurring a capital gains tax (CGT) liability.
The reform was originally announced in the Abbott government’s 2015 budget around nine months ago, with $40 million set aside for it over four years.
At the time, the government said the change will be made possible by an update to the current arrangements for CGT rollover.
Former small business minister Bruce Billson told SmartCompany last year the measure would be aimed at “businesses in transition” and at that stage, was intended to only apply to businesses that change legal structures once after formation.
Small business minister Kelly O’Dwyer said in a statement today the legislation will reduce complexity and make it easier for small businesses to grow.
“Small business owners who find they are using a legal structure that does not suit their needs will no longer be stuck with that structure,” O’Dwyer said.
“This is another example of the government reducing the burden of unnecessary red tape on small businesses.”
The bill is the final piece of legislation from the federal government’s small business package from last year’s budget.
Kate Carnell, chief executive of the Australian Chamber of Commerce and Industry, said in a statement simplifying tax laws is great news for business owners.
“It is all too easy for business owners to get stuck with the wrong legal structure,” Carnell said.
“New business owners often face many confusing choices about their regulatory obligations. An inappropriate choice of legal structure can hamstring an otherwise successful business’s growth potential.”