Small Business Tax Review Win

Small business win from Henry Tax Review

Today’s release of the Henry Tax Review by the Federal Government signals big returns for
small businesses over the next few years.

“The Government’s tax package recognises that the vast majority of businesses operating in Australia are small businessesi and that’s a very important starting point for tax reform,” said CEO Jaye Radisich.

“The new tax measures are set to help improve small business cash flow, support increases in production and productivity and promote innovation and entrepreneurial activity.”

But despite the gains through the proposed company tax cut and the improved depreciation arrangements, the Council of Small Business remains concerned that the landmark tax changes are tied to the new 40% Resource Super Profits Tax (RSPT) which is dependent on the RSPT being passed by the Senate.

Small business company tax cut
“A reduction in the company tax rate is good news for small business companies,” said Jaye Radisich.

“Although the Henry Review recommended a company tax cut down to 25%, a reduction
from 30% to 28% will still provide a strong cash flow boost for many small business
companies.

“The ‘head start’ in the company tax rate cut being offered to small businesses means that small businesses will benefit from the cut in three years’ time instead of four.

“It is likely that the reduction in the company tax rate will encourage more entrants into the  small business sector, and thereby promote innovation and entrepreneurial activity and grow jobs.”

Depreciation changes
“The depreciation changes announced today will significantly enhance small business cash
flow and will decrease the compliance costs of tracking assets for the purposes of
depreciation,” said Jaye Radisich.

“It would be ideal if the instant write off threshold could be implemented in the 2010/11
budget, rather than having to wait until 2012/13.

“Naturally small businesses would have preferred an increase in the instant write-off
threshold to $10 000 as recommended by the Henry Review, however the $5000 threshold
represents a significant improvement on the current arrangements.

“The Government has flagged that depreciation for other assets will be simplified, so we look forward to seeing the details of these additional plans soon.”

Superannuation Guarantee
Ms Radisich said that there is little doubt that the increase in the Superannuation Guarantee (SG) of 3% will be passed on to consumers given that it represents a direct cost for business.

“However, the seven (7) year phase in period for the SG changes will make it easier for businesses to adjust to the increase, and will enable small businesses to plan and budget for the increased costs, and to factor these in to future wage negotiations.”

“The Council is disappointed that the Government has not sought compulsory
superannuation contributions from employees.”

Resource Super Profits Tax
Jaye Radisich expressed concern that the landmark tax changes set to benefit small
business are tied to the new 40% Resource Super Profits Tax (RSPT).

“The small business tax relief package is dependent on the successful implementation of the Resource Super Profits Tax (RSPT) which must be passed by the Senate.”

A simpler tax system
“It is reassuring that the Henry Review and the Government have recognised that small
businesses tend to bear a higher proportion of the burden of tax administration, and are
more likely to be held back by red tape and complexity than larger businesses.”

“It is essential that the work to simplify Australia’s tax system is ongoing, so that the nearly two million small businesses in Australia can be as productive as possible, and can spend their time innovating and creating jobs, rather than reporting to the ATO.

“The Council of Small Business looks forward to the Government’s further announcements
on making tax time simpler for working families, especially for sole traders and partnerships.”

The Council of Small Business supports recommendations by the Henry Tax Review about
which the Government has not responded in detail, including further reform of the
conveyance stamp duty, a comprehensive review of FBT and the abolition of state payroll
taxes.

“Going forward, it is essential that access to affordable, quality childcare options for small
business owners is developed and that the administration of alcohol taxes is simplified.”

“COSBOA strongly opposes the Government’s announcement from last week increasing the
excise on the sale of tobacco products by 25%, and agree with the Henry Review that the
duty free allowance on tobacco products for incoming residents and visitors to Australia be
abolished.”