You may or may not be aware that the Government announced in the 2016-17 Federal Budget that the small business tax offset rate would incrementally increase from 5% to 16% over a 10 year period.
The Government plans to increase the rate to 8% for the 2017 income year.
Unfortunately, the Bill containing this change has not passed through Parliament and it is not entirely clear if and when this will occur. If the legislation is not passed prior to relevant tax returns being lodged, the ATO has announced that from an administrative point of view, it will accept returns as lodged up until the proposed law change is passed by Parliament.
When the law is passed taxpayers and practitioners will need to seek amendments if the returns lodged do not reflect the new law. If a taxpayer claims the increased rate but the new law is not enacted as expected, the ATO has indicated that no tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change.
In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted. However, this will only be the case if the taxpayer actively seeks to amend their assessment within a reasonable timeframe after the law is passed.
This article has been published with thanks to The Knowledge Shop
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