Business tax changes vital for small-business growth
Changes to company tax rates will deliver the best “bang for buck” in terms of driving economic growth, according to a joint statement from accounting software provider MYOB and the Council of Small Business Australia.
The statement comes after Labor signalled opposition to the government’s proposal to increase the eligibility threshold for paying the lower 27.5% tax rate from $2 million revenue to $10 million.
“Small business owners right across the country are counting on these changes. They’ll be watching to see which parties support economic growth and investment,” says MYOB CEO Mr Tim Reed.
Recent MYOB research shows that over half (56%) of small businesses believe that lowering the company tax rate to 27.5% for businesses up to $10 million in revenue will have a positive impact on their business.
“We’ve heard reports of businesses who are just below the current threshold holding back growth so they keep under the cap. It’s madness. The proposed changes will help businesses invest more in their operations, employ more staff, grow, proposer and as a result, pay more tax,” says Reed.
“We call on the government, opposition and the cross bench to come together to support these changes. Last month, we saw a positive display of bi-partisanship that delivered $6.3 billion of budget savings. Small businesses want to see the same kind of leadership over this proposal,” says Reed.
Council of Small Business Australia CEO Mr Peter Strong says it is high time the $2 million threshold was changed, given it came into use in 1996, and was then cemented in place with the introduction of GST in 2000.
“The threshold hasn’t changed in 20 years meaning inflation has pushed more and more businesses outside of the definition of small business. The parliament needs to make these common sense changes to help our businesses succeed,” says Strong.
“When small businesses are doing well, the whole economy does well. The proposed changes are critical for setting our economy up to succeed and should be supported by all parties,” adds Strong.
The proposed changes to business tax rates would affect approximately 100,000 small businesses employing more than two million people across Australia. In addition to the lower tax rate, the changes will also increase the number of business who have access to an instant tax write off for purchases up to $20,000, simplify rules for quarterly taxation (BAS) payments and increase the unincorporated small business tax discount from 5% to 8%.
The draft laws would gradually reduce corporate tax rate for all companies to 25% by 2026.
“Implementation of the full set of company tax reductions is needed for Australia to remain competitive,” adds Reed.
“Business is an ecosystem. Over $500 billion of trade occurs between big and small businesses every year. For every $1 a small business spends with a big business, big businesses spend $2 with small businesses. MYOB research shows that the majority of small businesses support the reduction in company tax for all businesses because they understand they are needed for Australia to be globally competitive. Small-business owners know that big businesses investing and increasing employment leads to growth for small businesses,” says Reed.