Budget 2009: Holiday shack attack

The Federal Government has officially closed a loophole that allows owners of non-commercial businesses such as holiday homes and hobby farms to claim tax deductions.

The Government says the changes will effect 11,000 mostly high income earners who “exploit parts of the tax system to unfairly minimise or avoid their tax obligations” by claiming deductions on non-commercial businesses that “are no more than hobbies or lifestyle choices”.

Under current rules, personal income tax deductions can be claimed against salary, wage and other income for activities like running hobby farms that may not ever make a profit.

To address this loophole, from 1 July taxpayers with adjusted taxable incomes of over $250,000 will only be able to deduct those expenses against the income from the non-commercial business activity.

“The new measures will save around $880 million in extra revenue over the forward estimates and will help ensure everyone pays their fair share of tax,” Federal Treasurer Wayne Swan says.

 What do you think? Send us your comments using the field below.

• Budget 2009: Small business tax break boosted from 30% to 50%
• Budget 2009: Exporters get extra funding
• Budget 2009: Do Not Call register expanded
• Budget 2009: $22 billion for infrastructure in budget
• Budget 2009: First home owner grant extended for three months
• Budget 2009: High and middle-income earners hit by changes to private health insurance, super
• Budget 2009: Innovation spending boost, but new R&D tax breaks delayed
• Budget 2009: Key budget measures at a glance
• Budget 2009: Funds for textile, clothing and footwear sector