Government releases exposure draft legislation to reduce tax burden on granny flat arrangements and employer-provided retraining

Australian Treasury

The Government has today released draft legislation to give effect to two measures announced in the 2020‑21 Budget.

On 5 October 2020, the Government announced a targeted capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement in place.

Tax consequences can be a key impediment to families creating formal and legally enforceable granny flat arrangements. 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.

Under the measure, CGT will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities.

The Exposure Draft Bill and Explanatory Memorandum for this measure is available on the Treasury website.

On 2 October 2020, the Government announced a targeted fringe benefits tax (FBT) exemption for employer-provided retraining and reskilling benefits for redundant (or soon to be redundant) employees where the benefits provided enable the employee to gain new employment.

FBT is generally payable when an employer provides education or training to redundant employees if the benefits provided do not have sufficient connection to their current employment. This measure will provide an FBT exemption to employers for retraining and reskilling benefits, incentivising employers to retrain redundant employees so they are better prepared to transition to their next career.

The Exposure Draft Bill and Explanatory Memorandum for this measure is available on the Treasury website

Submissions for both measures will be accepted between 16 April 2021 and 29 April 2021.

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