It said the original purpose for introducing these concessions was to assist small business owners preparing for retirement, but the rules are so complex that taxpayers often find it’s not worth the effort of determining whether the concessions apply to them.

“Many small business owners rely on their small business as a vehicle to fund their retirement absent available resources to put into superannuation because they instead reinvest in their business,” The Tax Institute’s submission stated.

“The cost of complying with these rules is very high. Seeking advice on whether the concessions apply can prove too costly for some taxpayers due to the complexity of the rules.”

The Tax Institute stated in the submission that the policy intent for providing these concessions should be reviewed with a view to “simplifying the rules and making them easier to apply and to ensure they operate to provide relief to small business owners as intended”.