Treasury has released Treasury Laws Amendment Instrument 2024: Small Business Exemption (the Draft Regulations) for public comment.

UPDATE: National Consumer Credit Protection Amendment (Small Business Exemption) Regulations 2024 registered on 26 September 2024.

The Regulations will amend the National Consumer Credit Protection Regulations 2010 to extend the existing exemption from responsible lending obligations for small businesses which will expire on 3 October 2024 for a further two years until 3 October 2026.

The exemption means a mixed-purpose small business loan is not subject to the responsible lending obligations when the loan has a real business purpose that is not insignificant or peripheral to the loan.

Consumer credit laws, including the responsible lending obligations in Chapter 3 of the National Credit Act, do not generally apply to business and commercial lending. However, these laws will apply to mixed-purpose loans (for example, where a small business or sole trader applies for a single loan to be used for both personal and commercial purposes) unless the ‘predominant’ purpose of the loan is business-related.

For the purposes of the exemption, a small business is one that has fewer than 100 employees or revenue of $5 million or less in the previous financial year.

Treasury says extending the exemption will provide an additional two years of data to inform a future decision on whether the exemption should be made permanent, allowed to expire, or modified to improve its effectiveness.

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