Government Closes Hobby Farm Tax Loophole
The Federal Government has introduced legislation to close tax loopholes around hobby farms and smaller non commercial pursuits exploited by nigh income individuals.
Assistant Treasurer Nick Sherry said the legislation would give effect to the changes to the non commercial losses rules announced in the 2009 – 2010 Budget.
“The current loophole in the rules allows high income individuals to take advantage of the tax system and claim deductions meant for functioning businesses when the non commercial activity is no more than a hobby or lifestyle choice,” Sherry said “The targeting contained in this measure will contribute $700 million to the budget bottom line over the forward estimates.”
Under the existing rules, individuals may apply losses against their other income where one of four tests is met.
The current four tests focus on the business activity’s prior years profits, its revenue and the assets, such as real estate and equipment, that are involved in carrying on the business.
The new non commercial losses rule will prohibit individuals win an adjusted taxable income of more than $250,000 from applying losses from non commercial business activities against their other income, unless the Commissioner of Taxation has assessed the activity as genuinely commercial.
Disclaimer: this authors of this blog do not purport to give financial, accounting or taxation advice. Do not rely on anything we say here. Instead consult with your accountant or tax professional.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
