With another Federal Budget looming large on the horizon, Mark Chapman from Taxpayers Australia has compiled this SME tax wish list for the forthcoming budget, the first to be handed down by the Abbott government.
SMEs will be justified in hoping that the government will try to demonstrate a commitment to Prime Minister Tony Abbott’s own words, that Australia is “open for business”, by introducing some small business-friendly measures when the Budget is announced in May.
There are some simple and yet very effective measures that I would hope the government will consider. Re-introducing the loss carry-back provisions is crucial if Australian businesses are to compete on a global scale, as overseas businesses commonly have greater flexibility in the use of losses.
Some serious tax steps from the Abbott Government are also required in the following areas:
- Making capital investment a more viable option through targeted tax breaks for small business, including the reintroduction of an increased threshold for immediate asset write-off for small businesses up to an asset value of $10,000.
- Simplify the administrative tasks regarding income tax and GST compliance, including the simplification of forms and streamlining procedures.
- Allow a more flexible tax treatment of shares as a remuneration tool and an incentive mechanism, particularly for start-ups, which rely on providing equity to attract and retain key talent.
- A wholesale re-design of the small business CGT concession regime. These valuable concessions should continue to reduce or eliminate CGT for the many small business owners who retire, sell or re-invest, but as they stand are a minefield for the average small business owner and are not efficiently utilised.
- The above should be combined with the introduction of a “stepped rate” for CGT, where the proportion of capital gain that is taxed diminishes over time.
- The harmonisations and streamlining of the different regulations and taxes across different states and territories.
- The introduction of a trial of a partial credit guarantee scheme to support small business access to finance.
- Reduction of the corporate tax rate to 25 per cent. Many other countries levy lower tax rates on small business than Australia does, and introducing a similar system here will serve to level an already uneven playing field for many smaller enterprises.
- Eliminate tax bracket creep by annually indexing taxation thresholds.
Finally, here is one proposal that Taxpayers Australia does not support. The Prime Minister has floated the idea of a “debt levy” (politician code for an income tax increase) to help pay down government debt. This won’t solve any of the structural problems that we are said to face, and it will directly hit many small businesses (particularly unincorporated ones) and will deal a blow to the already fragile consumer confidence. Hopefully, we’ll be hearing no more of this one when Treasurer Joe Hockey delivers his speech in a couple of weeks time.
Mark Chapman is Head of Tax at Taxpayers Australia and writes a regular column on tax and SMEs in My Business magazine.