SMEs will welcome confirmation that company tax cut will reduce for those with revenues up to $50 million, says MYOB.
The change was confirmed in an extended Senate session under a deal struck by the Government with the Nick Xenophon Team and will cost $5.2 billion over the next four years.
It will mean businesses with turnovers up to $10 million will pay 27.5 per cent this financial year. From 1 July, companies with turnovers up to $25 million will pay 27.5 per cent and, from 2018 to 2019, the tax rate will apply to those with $50 million annual turnovers.
“It’s great that the Federal Government recognises the importance of SMEs in helping to drive the Australian economy,” says Reed. “We’d liked to have seen confirmation of the whole 10-year plan to cut the rate from 30 per cent to 25 per cent for all companies by 2026-27, however the political realities in the Senate meant the government got the best deal it could for Australian businesses.”
Last year, a survey by MYOB revealed more than half (56 per cent) of small businesses believed that lowering the company tax rate to 27.5 per cent for businesses with up to $10 million in revenue would have a positive impact.
The survey also revealed that 72 per cent of SMEs agreed growth would be encouraged through widening the definition of a small business. Reed says the changes will mean business owners will be less constrained when it comes to scaling up.
“It’s good that those barriers to growth have been removed. The old system discouraged SMEs to grow beyond $2 million in revenue because of the benefits they lost from being counted as a small business. We hope the Government is able to secure support for its ongoing programme of company tax cuts. The simple fact is that lower corporate taxes across the board would have made Australian business more internationally competitive.
“For every dollar small businesses spend with big businesses, big businesses spend $2 with small businesses. This is the nature of the economic ecosystem we have – and we need the whole thing to be healthy. The confirmed changes will encourage small business to invest, take on more employees and grow. It’s a good day for Australian SMEs, their employees and the whole community,” Reed added.
“MYOB has been working alongside Australian SMEs for more than 25 years. We understand how important they are for our whole economy, which is why these changes are so welcome,” he concluded.
Inside Small Business
