The Government has announced that it will not proceed with the proposed reforms to the taxation treatment of finance leases between taxable entities.
The Government previously announced its in-principle agreement to the Review of Business Taxation recommendations to change the income tax treatment of finance leases between taxable entities. The Review proposed to apply a sale and loan treatment to certain finance leases, subject to further review.
After consulting with business, the Government has decided not to proceed with the Review’s recommendations.
The long-standing income tax treatment of finance leases between taxable entities will remain undisturbed. Consequently, finance leases will be excluded from the scope of the proposed taxation of financial arrangements legislation.
’This will assist small businesses as it will ensure that they will continue to have access to a broader range of asset financing options,’ Peter Dutton said.