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Government promises to ‘slash red tape’ for businesses

The Morrison Government has promised to reduce red tape and provide cash flow support for Australian businesses.

25 March 2022 

As part of the 2022-23 Budget, the government will set the GDP uplift rate that applies to pay-as-you-go (PAYG) instalments and GST instalments to 2% for the 2022-23 income year. 

This rate is significantly lower than the 10% rate that would have applied under the statutory formula.

The government believes these measures will generate an annual compliance saving of $800 million every year. This measure will apply to the 2022-23 income year, in respect of instalments that fall due after the enabling legislation receives Royal Assent.

The 2022-23 Budget also includes new measures to leverage technology to automate tax reporting requirements and align instalment payment obligations with financial performance. 

These measures will reduce compliance costs, improve processing times and support cash flow management for SMEs.

The government aims to support companies to manage cash flow by allowing them to calculate PAYG instalments based on financial performance. If financial performance declines, companies may be able to get refunds of instalments paid automatically.

The measure will initially support over 500,000 companies with PAYG instalment obligations.

New systems to implement this measure are expected to be in place by 31 December 2023 for implementation by 1 January 2024.

In addition, the government will facilitate sharing of single touch payroll data with State and Territory Governments on an ongoing basis to cater for pre-filling payroll tax returns. This will facilitate further investments by States and Territories in their own systems to improve lodgement accuracy, reduce compliance costs and save time for the approximately 170,000 businesses that have payroll tax reporting obligations.

Scott Treatt, General Manager of Tax policy and advocacy at The Tax Institute, said the move to use Single Touch Payroll data to pre-fill state payroll tax returns for business would be a big step in the right direction.

“More collaboration between the state and territory governments and the federal government can only bring compliance savings to business. I’m glad we’re seeing this start to take shape,” Mr Treatt said.

“We look forward to working with the government and their agencies through their consultation processes to ensure the greatest level of efficiency for small business is drawn from these measures.”

The government will allow eligible businesses the option to report taxable payments reporting system data via software at the same time as activity statements. Businesses that opt into automatic reporting will no longer need to invest time and money filling out the yearly Taxable Payments Annual Report.

Currently, approximately 190,000 businesses that contract for services relating to building and construction, cleaning, road freight and courier, security, investigation, surveillance or information technology services are required to fulfil this obligation on an annual basis.

New systems are expected to be in place by 31 December 2023, for implementation by 1 January 2024.

In the welcome news to business owners, the government said that they will develop systems to ensure all trusts will have the option to lodge income tax returns electronically. Digitalising the reporting of trustee and beneficiary obligations will reduce errors and processing times and create capacity to pre-fill beneficiaries’ tax returns.

“This is a smart approach to deregulation. Practical measures to reduce the hand breaks on business will save time on compliance, reduce costs, and boost efficiency, benefitting all Australians,” ACCI chief executive Andrew McKellar said.

“Too often, we hear of layer upon layer of regulatory bottlenecks that hold back businesses from realising their potential. The strength of our economic recovery is contingent on removing the regulatory burden on business, particularly for small and medium enterprises.

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