Less paperwork to emerge from Henry tax review

While there’s no indication that there will be any change to current $1000 threshold for GST-free purchases from overseas, the soon-to-be-released Henry tax review should hold a few sweeteners for small to medium-sized businesses.

Few details have leaked out from the wide-ranging review, headed by Treasury secretary Ken Henry, but it’s likely the number of taxes confronting small businesses will be reduced.

Prime Minister Kevin Rudd appointed Dr Henry as the head of the review committee in 2008 along with Family Services Department head Jeff Harmer; economists and academics John Piggott and Greg Smith; and Australian Industry Group chief executive Heather Ridout, as members.

The committee has received around 1500 formal submissions and more than 4700 letters from all sections of the community.

According to a survey released last week by Pricewaterhouse Coopers, nearly eight out of every 10 small business owners are hoping the review will slash and simplify business taxes. 

Grappling with 56 different state and federal business taxes is costing small companies a great deal of time and money, according to the survey of 750 companies with an annual turnover of between $10 million and $100m.

A large majority want a reduction in the number of business taxes while more than 60% want an improved write-off for capital expenditure. Nearly 60% call for more harmonisation of state taxes, and 54% want the income tax rules simplified.

"Small businesses need the Henry review to cut down on the tax red tape when doing business across different states," PwC partner Greg Will said.

"Besides 56 business taxes, there are 156 taxing points under capital gains tax alone under about 20 categories, which means firms have to sort out myriad tax regulations," he said.

"Sorting out business tax has become so complex firms have to employ external advisers and tax accountants, which can cost a significant amount in time and money.

Unlike big companies, they don't have the resources to manage these huge tax burdens,” he said.