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Draft legislation for two federal budget announcements last October has now been released, including measures to exempt employers from the 47 per cent fringe benefits tax and to provide capital gains tax exemption for granny flat arrangements.
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FBT, CGT exemption draft legislation surfaces
19 April 2021
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FBT for retraining and reskilling
The measure will provide employers with an exemption from FBT if they provide training or education to a redundant, or soon-to-be redundant, employee for the purpose of assisting that employee to gain new employment.
The exemption will not extend to retraining provided under a salary packaging arrangement or to costs for which an income tax deduction is specifically denied, including Commonwealth-supported places at universities or repayments towards Commonwealth student loans.
The measure will cover a variety of redundancy scenarios, including where an employee is made redundant in one part of the employer’s business but is able to be redeployed to another part of its business. It also covers circumstances where the employer reasonably expects the employee to be redundant, but has not yet been made redundant.
Assistant Treasurer Michael Sukkar said the government expects the measure to incentivise employers to retrain redundant employees so they are “better prepared to transition to their next career”.
Targeted CGT exemption for granny flats
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The measure will ensure a CGT event does not happen on entering into, varying or terminating a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities.
To access the exemption, the individual having the granny flat interest must have reached pension age or have a disability. The arrangement must be in writing and must not be of a commercial nature.
The measure comes after the Board of Taxation completed its review of the tax treatment of granny flat arrangements in 2019, recommending that the government provide an exemption for all CGT events that are hypothetically capable of applying to granny flat arrangements.
“Tax consequences can be a key impediment to families creating formal and legally enforceable granny flat arrangements,” Mr Sukkar said.
“When faced with a potentially significant CGT liability, families may opt for informal arrangements which can leave open the risk of financial abuse and exploitation.”
View the exposure draft legislation and explanatory material for the retraining FBT exemption here.
View the exposure draft legislation and explanatory material for the granny flat CGT exemption here.
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