Proposed tax rate changes, which would affect approximately 100,000 small businesses, will deliver the best “bang for buck” for the economy, accounting software provider MYOB and the Council of Small Business Australia said in a joint statement.
The statement was in response to Labor’s opposition to the Federal Government’s proposal to increase the eligibility threshold for paying the lower 27.5% tax rate from $2m revenue to $10m.
“Small business owners right across the country are counting on these changes,” said MYOB CEO Tim Reed.
“They’ll be watching to see which parties support economic growth and investment.”
‘The changes will help businesses prosper’
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 $10M 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,” Reed said.
“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.
“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 $6.3b of budget savings. Small businesses want to see the same kind of leadership over this proposal.”
‘Inflation has affected who is a small business’
Council of Small Business Australia CEO Peter Strong said it is high time the $2m 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,” he said.
“The parliament needs to make these common sense changes to help our businesses succeed. 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.”
‘The changes are good for the whole business ecosystem’
Strong said the proposed changes would affect approximately 100,000 small businesses employing more than 2 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 five per cent to eight per cent,” he said
Reed said full implementation of the proposed tax changes, which would gradually reduce the corporate tax rate for all companies to 25 per cent by 2026, is necessary for Australia to remain competitive.
“Business is an eco-system with over $500b of trade occurring between big and small business every year,” he said.
“For every one dollar a small business spends with a big business, big businesses spend two dollars 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 business investing and increasing employment leads to growth for small business.”