The Coalition government’s pre-Election Budget will please a sizeable proportion of Australian workers and small business operators according to Chartered Accountants Australia and New Zealand.
Commenting on the broader economic impact however, Michael Croker, Tax Leader – said corporate Australia would be disappointed by the bottom-up, painfully slow approach to company tax rate reductions.
“Australia is dangerously reliant on the company tax paid by a very small group of large companies, and their tax rate cut process won’t start till 2023-24. In the meantime, much faith has been placed in the responsiveness of small business to tax cuts starting 1 July 2016.”
Combined with the small bracket-creep adjustment for individuals on average earnings in the 32.5% rate band, Mr Croker said the slow pace of company tax relief in the Federal Budget highlighted once again the inconvenient truth facing the Australian community.
“Australia urgently needs to develop a more sustainable tax base to help fund services the community has come to expect, and worthy initiatives such as the NDIS. Sooner or later, we need to confront the need to increase the GST base or rate, or both.”
Mr Croker said the decision to lift the eligibility threshold for a range of small business tax concessions would give small business owners and would-be entrepreneurs confidence. In a policy sense, Australia’s low $2 million turnover threshold has unwittingly rewarded businesses that start small and stay small.
“The higher $10 million threshold boosts the next tier businesses which tends to invest more and hire more workers.”
Mr Croker acknowledged that all sides of the politics will go to the Federal Election with a tough on big business agenda, noting that the policies reflect broad community concerns about fairness.
“The tax affairs of large companies are under the microscope throughout the world and Chartered Accountants ANZ welcomes the government’s commitment to a tax transparency code which will better inform the community about the tax contribution made by big business.
Chartered Accountants ANZ contributed to the Board of Taxation’s model and we urge our members to engage with CEOs and Board members on this topic. We think the community will be pleasantly surprised by the level of support for this initiative that already exists amongst business leaders.”
“There is much for Chartered Accountants ANZ to contribute in response to measures announced in the Budget. Mandatory reporting of aggressive tax schemes and tax whistleblower protections are two important topics we will not shy away from. We look forward to participating in a collaborative design and implementation process with Treasury and ATO officials.”
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