Login
iscover
Notable exclusions from this year’s budget will impact the appeal of Australia as a place to do business, put the brakes on creating an efficient and productive tax system, and leave a crucial small business issue outstanding.
Newsletter
Budget misses compromise payments, tax efficiency
10 May 2017
•
11 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
In the lead up to this year’s federal budget, representative bodies and the business community alike again called on the government to make headway on national tax reform, in an effort to simplify Australia’s complex and often unproductive tax system.
For example, KPMG’s research found that 40 per cent of SMEs wanted to see an alignment or replacement of state taxes by creating broader-based federal taxes to simplify the tax system.
“It is evident that SMEs are calling for a simplification in the tax mix – the extent of state and federal taxes is viewed as burdensome and overcomplicated. More than half of our clients are calling for reform,” said KPMG enterprise tax partner Brett Mitchell.
However, this year’s budget saw no significant attempt at meaningful tax reform, which managing director for Thomson Reuters Australia and New Zealand, Ben Scull, noted often falls into the “too hard” basket.
Given the parliamentary climate, and how political the budget has become, Mr Scull says it’s “somewhat understandable” why the government chooses to look at tax reform separate to the budget.
“But the tax system and its legislation continues to lurch and struggle under its own weight – it’s not getting any simpler, nor any shorter, and more people than ever it seems require help with their tax compliance,” Mr Scull said.
==
==
Similarly, Institute of Public Accountants (IPA) chief executive Andrew Conway said ongoing avoidance of significant tax reform in Australia is a “handbrake” on continued economic growth.
“We are sill craving that reform as a nation,” Mr Conway told Accountants Daily.
Further, it appears there are no measures in the budget which address the impact of late payments on small businesses, which has been a long-term headline item for the small business community.
“The majority of Australian small businesses have a general payment term of 30 days for good reason. Cash is required to pay employees, purchase raw materials, equipment or goods, among others. Without a healthy cash flow cycle, business growth can be severely restricted, and indeed otherwise successful enterprises can go under,” said Clive Rabie, chief executive of Reckon.
In his budget address, federal treasurer Scott Morrison also reaffirmed his commitment to progressively decrease Australia’s company tax rate to 25 per cent for all businesses in order to increase Australia’s competitiveness and attract investment.
However, on the whole, not enough is being done to create incentive for investment in Australia, Mr Scull said, particularly when you consider relatively close by economic powerhouses, such as Singapore, that have highly competitive tax rates.
“There is a clear need to extend company tax cuts to companies of all sizes – there is no sound economic basis for providing lower rates only for smaller companies,” said Grant Wardell-Johnson, leader at KPMG's Australian Tax Centre.
“Inaction at the larger company sector does not help Australia’s competitiveness in attracting foreign direct investment,” he said.
You are not authorised to post comments.
Comments will undergo moderation before they get published.