Tax measures in tonight’s Federal Budget were a step in the right direction for small businesses, The Tax Institute said today.
President of The Tax Institute, Stephen Healey, said he welcomed the changes announced to improve cash flow for small businesses with aggregated annual turnover of less than $2 million and assist small businesses to start up and register.
“Allowing an immediate deduction for assets costing up to $20,000 as well as a deduction for the professional costs businesses have to pay when starting up will be a significant boost to many small businesses,” Mr Healey said.
“We are also pleased to see the capital gains tax burden lifted for small businesses that may later want to change their business structure.”
“Also, the proposal to streamline business registration to a single online point will be similarly beneficial, helping to reduce the administrative burden of registering a business,” he said.
Mr Healey also highlighted the tax cuts for small businesses. “While we would have preferred to see a cut to the company tax rate for all companies, the 1.5% company tax cut will certainly be welcomed by incorporated small businesses. It is also pleasing to see other small businesses have not missed out on receiving a discount on their tax bill too.”
The Tax Institute said other measures announced in the Budget addressed the symptoms of an outdated tax system rather than the underlying cause.
“Large businesses with global revenue of $1 billion or more have not been so lucky. The Government is making hasty changes to Part IVA anti-avoidance rules to target multinationals, and planning even more onerous transfer pricing documentation requirements. These measures pre-empt extensive global, co-ordinated efforts to address the well-recognised concerns around base erosion and profit shifting.”
The Government has also announced a plan to extend the application of GST to products and services supplied digitally from overseas, which poses challenges for compliance.
“Bolting on these types of measures demonstrates that the tax system we currently have was designed for a different time. Rather than tinkering, the whole tax system requires an overhaul so that it can adapt to a changing economy without the need for Band-Aid measures.”
Publication date: 12 May 15
Source: The Tax Institute