Family businesses hit by capital gains tax

ATA says government needs make small business tax compliance fairer and simpler

Family businesses hit by capital gains tax
The ATA's Christopher Melham says applying capital gains tax to family business transfers is unfair.


Small owner operators may be better off passing their businesses on to their children through inheritance, rather than having the transfer subject to capital gains tax (CGT), the Australian Trucking Association (ATA) is warning.

In a submission to the Federal Government’s Re:think tax discussion paper, the ATA is urging the government to make in-family handovers exempt from the tax.

The government also needs to further reduce the complexity of small business tax arrangements, it says.

"The trucking industry is largely populated by small businesses with just one or two trucks. Many of the businesses are family owned or run," ATA CEO Christopher Melham says.

"The current arrangements limit the viability of transferring businesses, and can cause great distress and conflict within families.

"As deceased estates are not subject to CGT, some family businesses may have to wait for the older generation to pass away before the younger generation can take ownership – a very upsetting situation," Melham says.

"When a parent passes on their business to their children, they are essentially passing on their source of income and should not pay CGT."

Melham acknowledges the small business focus of the 2015 federal budget, but says bigger reforms are still needed.

"The ATA was very pleased that the importance of small business was recognised, with an estimated 45,000 of Australia’s 49,000 trucking businesses to benefit from the small business tax cut and improved asset deduction process," he says.

"However, tax compliance is still an expensive and time-consuming exercise for small businesses."

The ATA’s submission also reiterates its call for road user charges to become revenue-neutral.

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